Danone // 2020 Universal Registration Document

DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 92 4.1 Consolidated financial statements and notes to the consolidated financial statements Note 10. Intangible assets Carrying amount As of December 31 (in € millions) 2019 2020 Tax losses – recognized portion Recognized tax loss carryforwards (a) (b) 1,167 1,157 Tax savings (c) 306 302 Tax losses – unrecognized portion Tax loss carryforwards and tax credits not yet used (a) 550 563 Potential tax savings 148 154 (a) Basis amount. (b) In 2020, as in 2019, they mainly come from the French consolidated tax group. (c) Corresponds to deferred tax assets based on tax loss carryforwards. Consumption horizon Most of the tax losses as of December 31, 2020 can be carried forward indefinitely. The probable consumption horizon for most of these losses is less than ten years. NOTE 10. INTANGIBLE ASSETS Note 10.1. Accounting principles Goodwill When control of a company is acquired, the fair value of the consi- deration given to the seller is allocated to the acquired identified assets and the liabilities and contingent liabilities assumed, which are measured at fair value. The difference between the considera- tion given to the seller and the Group’s share of the fair value of the acquired identified assets and the liabilities and contingent liabili- ties assumed represents goodwill. When the option of recognizing non-controlling interests at fair value is applied, a corresponding premium is allocated to goodwill. Goodwill is recognized in the consolidated balance sheet as an asset under the heading Goodwill. Goodwill arising from the acquisition of a foreign entity is recognized in the functional currency of the entity acquired and translated at the exchange rates prevailing on the closing date. Goodwill is not amortized but is tested for impairment at least annually. For the purposes of impairment testing, goodwill is allocated to the Cash Generating Units (CGU) or groups of CGUs most likely to benefit from the synergies of the business combination and to the lowest level at which goodwill is monitored by the Group. The CGUs correspond to subsidiaries or groups of subsidiaries that are included in the same Reporting Entity and that generate cash flows largely independent from those generated by other CGUs. Brands with indefinite useful lives Acquired brands that are distinguishable, have a significant value, are supported by advertising expense and have indefinite useful lives are recorded under the heading Brands in the consolidated balance sheet. The valuation of these brands is generally determined with the assistance of valuation specialists, taking into account various factors, including brand awareness and their contribution to ear- nings. These brands, which are legally protected, are not amortized but are tested for impairment annually or more frequently if signs of impairment exist (see hereinafter). Other brands Other acquired brands that are deemed to have finite useful lives are presented under the heading Brands in the consolidated balance sheet. They are amortized on a straight-line basis over their esti- mated useful lives, which do not exceed 60 years. The amortization charges in respect of brands with finite useful lives are allocated to various headings in the income statement on the basis of the nature and utilization of the brands concerned. Development costs Development costs are only recognized under assets in the conso- lidated balance sheet if all the recognition criteria set by IAS 38 Intangible Assets are met before the products are launched on the market. They are amortized over the term of their legal protection granted to the Group as from the date the corresponding products are launched on the market. Development costs are generally ex- pensed as incurred (see Note 6.1 of the Notes to the consolidated financial statements). Technologies, development costs and other intangible assets The following elements are recognized in the balance sheet under the heading Other intangible assets: • acquired technologies, which are generally valued with the assistance of specialized consultants and amortized over the average duration of the patents; • acquired development costs meeting the criteria for the recogni- tion of an intangible asset in accordance with IAS 38 Intangible Assets (see above); • other acquired intangible assets are recognized at their acquisi- tion cost. They are amortized on a straight-line basis over their estimated economic lives, which do not exceed 40 years. The amortization charges in respect of these assets are allocated to various headings in the income statement on the basis of their nature and utilization.