ANNUAL REPORT 2021
LUNDBECK
ANNUAL REPORT 2021
E CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 25
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25 SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Product rights and other intangible assets
Acquired intellectual property rights in the form of product rights, patents, licences, customer relationships
and software are measured at cost less accumulated amortization and impairment losses. The cost of
software comprises the cost of planning, labor and costs directly attributable to the project.
Product rights are amortized over the economic lives of the underlying products, which in all material aspects
follow the patent terms, which are currently between five and fifteen years. Other rights are amortized over
the period of agreement. Amortization commences when the asset is ready to be brought into use.
Amortization is recognized in profit or loss under cost of sales and research and development costs,
respectively.
Borrowing costs to finance the manufacture of intangible assets are recognized in the cost price, if such
borrowing costs relate to the production period. Other borrowing costs are expensed.
Gains and losses on the disposal of development projects, patents and licences are measured as the
difference between the selling price less cost to sell and the carrying amount at the time of sale. In general,
amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
Property, plant and equipment
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses.
Land is not depreciated.
Cost includes the costs of purchase and expenses directly attributable to the purchase until the asset is ready
for use. The cost of self-constructed assets includes costs directly attributable to the construction of the asset.
Borrowing costs to finance the construction of property, plant and equipment are recognized in the cost price,
if such borrowing costs relate to the production period. Other borrowing costs are expensed.
Property, plant and equipment is depreciated on a straight-line basis over the estimated useful lives of the
assets:
Buildings
• Installations
• Plant and machinery
.
Other fixtures and fittings, tools and equipment
Leasehold improvements, max.
30 years
10 years
3-10 years
3-10 years
10 years
Depreciation methods, useful lives and residual values are reassessed annually and adjusted if appropriate.
Costs incurred that increase the recoverable amount of an asset are added to the value of the asset as an
improvement and are depreciated over the estimated useful life of the improvement.
Gains or losses on the sale or retirement of items of property, plant and equipment are calculated as the
difference between the carrying amount and the selling price less cost to sell or discontinuance costs. Gains
and losses are recognized in profit or loss; normally in a separate line item or, if considered immaterial to the
understanding of the consolidated financial statements, in the same line item as the associated depreciation.
Right-of-use assets are initially measured at cost, which comprises the initial amount of the liability adjusted
for any lease payments made at or before the commencement date, plus any initial direct costs incurred and
an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the
site on which it is located, less any lease incentives.
Subsequently, the right-of-use asset is depreciated using the straight-line method from the commencement
date to the end of the lease term. Depreciation is recognized in profit or loss. Right-of-use assets are
presented as part of property, plant and equipment.
Impairment
Intangible assets with indefinite useful lives, intangible assets not yet available for use and goodwill acquired
in a business combination are not subject to amortization and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they may be impaired. The annual impairment
test is performed irrespective of whether there is any indication of impairment.
Intangible assets and property, plant and equipment in use with finite useful lives are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.View entire presentation