NWG Annual Report 2019 - EN NWG Annual Report 2019 - EN | Page 72

NWG // FINANCIAL INFORMATION //
THE GROUP
Within the Group there are also a few smaller
contracts with repurchase commitments where New
Wave Group delivers goods to the customer with full
return right at the same price as the original sale. The
Group recognizes a right-of-return asset as inventory
and a repayment liability for expected returns as other
liabilities in the Group´s consolidated balance sheet.
The income and costs related to the expected returns
are not recognized in the Group´s consolidated income
statement until the return period expires.
If the Group has received payments from customers
without any performance obligation being fulfilled, a
contractual liability is recognized as prepaid expenses
and accrued income in the Group's consolidated
balance sheet. The Group has a number of sponsorship
agreements, which imply an exchange of goods and
services between the contractual parties. In the spon-
sorship agreements where the customer has a distinct
obligation, mainly related to marking activities, and
the customer receives free goods as compensation,
New Wave Group recognizes a revenue that is valued
to the fair value of the transferred goods. The revenue
is recognized in connection with delivery of the
goods. New Wave Group does not have any significant
guarantee commitments. The Group has insignificant
revenues from royalty, commission and membership
fees for customer clubs, which are recognized as net
sales in the consolidated income statement.
Intangible fixed assets
The Group´s intangible assets consists of goodwill,
trademarks, computer software and other intangible
assets. Other intangible assets primarily consist of
customer relations. Goodwill arises in connection
with business combinations where the consideration
transferred exceeds the fair value of the acquired net
assets. Trademarks and customer relations arises
in connection with business combinations and are
measured at fair value at the time of the acquisition.
Computer software consists of acquired assets and
internally developed assets.
Product development for the Group mainly
comprises design and development of new
collections as well as development of new product
variants within the existing product range. Such
development generally does not meet the criteria for
recognition in the balance sheet and is in those cases
expensed on a current basis. All other expenditures
during the research phase as well as development
expenditures not meeting the capitalization criteria
are charged to the income statement when incurred.
072 // ANNUAL REPORT
Expenditures related to internally developed intan-
gible assets, excluding goodwill, which emerge during
the development phase are capitalized only when in
management’s judgement it is probable that they will
result in future economic benefits for the Group and
the expenditures during the development phase can be
reliably measured. The cost of an internally developed
asset includes direct manufacturing expenditures and
a portion of indirect expenses attributable to the actual
asset. Amortization begins when the asset is available
for use and is reported on a straight-line basis over the
expected useful life of the asset.
Intangible assets are recognized at cost less
accumulated depreciation and write-down and are
amortized on a straight-line basis over their useful
lives. An intangible asset with an indefinite useful life
is not amortized but tested for impairment annually
or more frequently. New Wave Group recognizes
goodwill and trademarks, which are both classified
as intangible assets with indefinite useful lives. The
following yearly depreciation in % are applied in New
Wave Group:
Computer software
Other intangible fixed assets*
15-33 %
5-10 %
* Primarily consist of customer relations
Tangible fixed assets
Tangible fixed assets are valued at cost after adjusting
for depreciation and any write-downs, and are depre-
ciated on a straight-line basis over their expected
useful lives. In determining the depreciable amount
for an individual asset account is taken of any residual
value of the asset. To the extent that an asset consists
of components which differ materially in respect of
their useful lives, these are depreciated separately
(component depreciation). The acquisition value of
a tangible fixed asset that has been manufactured
includes direct manufacturing expenses and shares
of attributable indirect expenses. Depreciation begins
when the asset becomes available for use. Land is not
depreciated.
Tangible fixed assets are removed from the Group´s
consolidated balance sheet upon sale or if the asset is
not expected to generate any future economic benefits
neither by being used nor being sold. Capital gains
and losses are calculated as the difference between
the consideration received and the asset’s carrying
amount. The capital gain or loss is recognized in the