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Note 11 Intangible assets and property, plant and equipment
Accounting principles
Computer software development costs
The cost of development or acquisition of new software clearly associated with an identifiable and unique product that will be controlled by the group and has probable benefit exceeding its cost beyond one year is recognised as an intangible asset and amortised over the expected useful life of the software. Website costs are expensed as incurred.
Goodwill
Goodwill represents future economic benefits arising from assets that are not capable of being individually identified and separately recognised by the group on an acquisition. Goodwill is computed as the excess of the cost of an acquisition over the fair value of the group’s share of the fair value of net assets of the acquired subsidiary at the acquisition date, and is allocated to those groups of cash generating units expected to benefit from the acquisition for the purpose of impairment testing. In compliance with IFRS 3, the cost of an acquisition is equal to the sum of the consideration transferred, the value of the non-controlling interest in the acquisition and the fair value of the previously held interest in the acquired subsidiary. Goodwill arising on the acquisition of non-euro foreign entities is treated as an asset of the foreign entity denominated in the local currency and translated at the closing rate.

Goodwill is not amortised but tested for impairment on an annual basis, or more frequently if there is an indication of impairment. Gains and losses on the disposal of a group entity include any goodwill relating to the entity sold.

Goodwill arising upon the acquisition of an equity accounted investment or joint arrangement is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the group’s share of the net fair value over the cost of the acquisition, after reassessment, is recognised immediately in the income statement.
Intangible assets
Intangible assets are stated at historical cost and amortised on a straight-line basis over their expected useful lives, which usually vary from 3 to 10 years and up to 20 years for patents. An adjustment is made for any impairment. Intangible items acquired must be recognised as assets separately from goodwill if they meet the definition of an asset, are either separable or arise from contractual or other legal rights, and their fair value can be measured reliably.

Intangible assets recognised separately from goodwill in acquisitions consist of marketing and customer-related or contract and technology-based intangible assets. Typical marketing and customer-related assets are trademarks, trade names, service marks, collective marks, certification marks, customer lists, order or production backlogs, customer contracts and the related customer relationships. The contract and technology-based intangible assets are normally licensing and royalty agreements or patented technology and trade secrets such as confidential formulas, processes or recipes. The fair value determination of customer contracts and related relationships is derived from expected retention rates and cash flow over the customers’ remaining estimated lifetime. The value of trademarks is derived from discounted cash flow analysis using the relief from royalty method.
Property, plant and equipment
Property, plant and equipment acquired by group companies are stated at historical cost, augmented where appropriate by asset retirement costs. Assets arising on the acquisition of a new subsidiary are stated at fair value at the date of acquisition. Depreciation is computed on a straight-line basis, as adjusted for any impairment and disposal charges. The Consolidated Statement of Financial Position value represents cost deducted by received grants and subsidies and less accumulated depreciation and any impairment charges. Interest costs on borrowings to finance the construction of these assets are capitalised as part of the cost during the construction period when requirements are fulfilled.

Land is not depreciated as it is deemed to have an indefinite life, but otherwise depreciation is based on the following expected useful lives:
Asset Class Depreciation Years
Buildings, industrial 10-50
Buildings, office & residential 20-50
Groundwood mills 15-20
Hydroelectric power 40
Paper, board and pulp mills, main machines 20
Heavy machinery 10-20
Converting factories 10-15
Sawmills 10-15
Computers 3-5
Vehicles 5
Office equipment 3-5
Railway, harbours 20-25
Forest roads 10-35
Roads, fields, bridges 15-20
Ordinary maintenance and repair charges are expensed as incurred, but the costs of significant renewals and improvements are capitalised and depreciated over the remaining useful lives of the related assets. Retirements, sales and disposals of property, plant and equipment are recorded by deducting the cost and accumulated depreciation from the accounting records with any resulting terminal depreciation adjustments reflected in impairment charges in the Consolidated Income Statement. Capital gains are shown in other operating income.

Spare parts are accounted for as property, plant and equipment if they are major and used over more than one period, or if they are used only in connection with an item of property, plant and equipment. In all other cases, spare parts are carried as inventory and recognised in profit or loss as consumed.
Intangible assets
Year Ended 31 December
EUR million Computer Software Other Intangible Assets Goodwill Total
Acquisition Cost
At 1 January 2015 231 241 1 184 1 656
Translation difference -1 26 12 37
Reclassifications 4 28 - 32
Additions 4 2 - 6
Disposals2 -13 - - -13
At 31 December 2015 225 297 1 196 1 718
Translation difference - -2 -3 -5
Reclassifications 3 8 - 11
Additions 9 3 - 12
Disposals2 -9 -131 - -140
At 31 December 2016 228 175 1 193 1 596
Accumulated Amortisation and Impairment
At 1 January 2015 203 112 942 1 257
Translation difference - 18 6 24
Disposals2 -13 - - -13
Amortisation 9 8 - 17
At 31 December 2015 199 138 948 1 285
Translation difference 1 2 -4 -1
Disposals2 -9 -126 - -135
Amortisation 9 9 - 18
Impairment - - 11 11
At 31 December 2016 200 23 955 1 178
Net Book Value at 31 December 2016 28 152 238 418
Net Book Value at 31 December 2015 26 1591 248 4331
1 The presentation of Intangible assets and Tangible assets has been further specified with regard to the comparison period in Parent company statement. Due to this change, the amount of Group`s Intangible assets increased by EUR 29 million and the amount of Group`s Property, plant and equipment decreased respectively.
2 Company disposals are included Disposals line. Company disposals are discussed in more detail in Note 4 Acquisitions and disposals.
Property, plant and equipment
Year Ended 31 December
EUR million Land and Water Buildings and Structures Plant and Equipment Other Tangible Assets Assets in Progress Total
Acquisition Cost
At 1 January 2015 432 3 402 14 780 448 431 19 493
Translation difference -5 16 83 -6 11 99
Reclassifications - 62 126 6 -225 -31
Reclassifications to biological assets - - -2 - - -2
Additions 22 34 256 7 587 906
Disposals2 -39 -110 -1 166 -5 -10 -1 330
At 31 December 2015 410 3 404 14 077 450 794 19 135
Translation difference 23 31 -83 5 -17 -41
Reclassifications - 21 410 9 -451 -11
Reclassifications to biological assets - - -2 - - -2
Additions 1 281 339 5 - 626
Disposals2 -39 -195 -905 -27 -12 -1 178
At 31 December 2016 395 3 542 13 836 442 314 18 529
Accumulated Depreciation and Impairment
At 1 January 2015 62 2 159 11 474 365 14 14 074
Translation difference - -12 32 -5 -1 14
Disposals2 -26 -101 -1 156 -5 -9 -1 297
Depreciation - 89 404 12 - 505
Impairment 3 29 202 3 4 241
At 31 December 2015 39 2 164 10 956 370 8 13 537
Translation difference - 6 -109 5 1 -97
Disposals2 -33 -175 -810 -27 -5 -1 050
Depreciation - 85 389 12 - 486
Impairments and reversals - 16 19 6 1 42
At 31 December 2016 6 2 096 10 445 366 5 12 918
Net Book Value at 31 December 2016 389 1 446 3 391 76 309 5 611
Net Book Value at 31 December 2015 371 1 240 3 1211 80 786 5 5981
1 The presentation of Intangible assets and Tangible assets has been further specified with regard to the comparison period in Parent company statement. Due to this change, the amount of Group`s Intangible assets increased by EUR 29 million and the amount of Group`s Property, plant and equipment decreased respectively.
2 Company disposals are included in Disposals line. Company disposals are discussed in more detail in Note 4 Acquisitions and disposals.
Intangible assets and property, plant and equipment additions
Total capital expenditure for the year in Stora Enso Oyj and its subsidiaries amounted to EUR 638 (EUR 912) million. Details of ongoing projects and future plans are discussed in more detail in the Report of the Board of Directors .

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