Group Management Report Corporate Governance Environment, Safety, and Corporate Social Responsibility Consolidated Financial Statements 91 Amortization expense relates to intangible assets with definite useful lives and is recorded based on their function in cost of sales, selling and distribution expenses, research and devel- opment expenses or general administration expenses. Intangible assets with indefinite useful lives as well as goodwill are not amortized but tested for impairment regularly. Impairment losses on these assets are recorded in other oper- ating expenses (see “Impairments of Intangible Assets and Property, Plant and Equipment”). Property, Plant and Equipment Property, plant and equipment are measured at acquisition or manufacturing cost less accu- mulated depreciation. Cost includes certain costs that are capitalized during construction, including material, payroll and direct overhead costs. Borrowing costs that are directly attribut- able to qualifying assets are capitalized. Government grants are deducted from the acqui- sition or manufacturing costs. Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets: Years Buildings and leasehold 2 to 75 Plant and machinery 2 to 30 Equipment 2 to 30 Maintenance and repairs are expensed as incurred while replacements and improvements are capitalized, if the item qualifies for recognition as an asset, as well as an asset retirement obligation. Gains or losses resulting from the sale or retirement of assets are recognized in other operating income or expenses. Depreciation expense of property, plant and equipment is recorded based on their function in cost of sales, selling and distribution expenses, research and development expenses or general administration expenses. Investment property comprises land and buildings not used in the production or for administrative purposes and is measured at amortized cost. The fair value is measured using the discounted cash flow method or with the support of an external expert by applying input factors for comparable assets not traded on active markets (fair value hierarchy level 2). Impairment of Intangible Assets and Property, Plant and Equipment Irrespective of whether there is any indication of impairment, the Company tests goodwill acquired in a business combination and intangible assets with an indefinite useful life for impairment at least annually. For the purpose of testing goodwill for impairment, such good- will is allocated to cash-generating units that are expected to benefit from the synergies of the business combination. In accordance with IAS 36, “Impairment of Assets,” an impair-
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