Page 77 - Annual Report 2010

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Financial Statements

counted for at cost net of accumulated amortisation and impairment losses.

Direct costs associated with the development of software are capitalised provided that these costs are separately identifiable, the software provides a future benefit to the Fund and the cost can be reliably measured. Mainte-nance costs are recognised as expenses during the year in which they occur. However costs to develop additional functionalities are recognised as separate intangible as-sets. Intangible assets are reviewed for indicators of im-pairment at the date of the statement of financial position.

Intangible assets are amortised using the straight - line method over the following estimated useful lives:

Internally generated software 3 years Purchased software 2 to 5 years

2.6.2 Equipment

Equipment is stated at cost less accumulated deprecia-tion and impairment losses. Equipment is reviewed for indications of impairment at the date of the statement of financial position.

Depreciation is calculated on a straight-line basis over the following estimated useful lives:

Fixtures and Fittings 3 to 10 years Office Equipment 3 to 5 years Computer Equipment and Vehicles 3 years

2.6.3 Investment property

Investment property is property held to earn rentals or for capital appreciation or both. Investment property is stated at cost less accumulated depreciation and impairment losses and is reviewed for signs of impairment at the date of the statement of financial position.

Depreciation is calculated on a straight-line basis over the following estimated useful life:

Buildings 30 years

2.6.4 Impairment of non-financial assets

EIF assesses at each reporting date the carrying amounts of the non-financial assets to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. If the car-rying amount exceeds the estimated recoverable amount, impairment losses are recognised in the profit or loss.

2.7 Employee benefits

Actuarial valuations involve making assumptions about discount rates, expected rates of return of assets, future salary increases, mortality rates and future pension in-creases. All assumptions are reviewed at each reporting date. Due to the long- term nature of these plans, such estimates are subject to significant uncertainty.

2.7.1 Post-employment benefits

Pension fund

EIF operates an unfunded pension plan of the defined benefit type, providing retirement benefits based on final salary. The cost of providing this benefit is calculated by the actuary using the projected unit credit cost method.

Actuarial gains and losses are amortised over the average remaining working life of the population through the profit or loss.

The Fund’s def ined benef i t scheme was ini t iated in March 2003 to replace the previous defined contribu-tion scheme. The scheme is funded by contributions from staff and the Fund. These funds are transferred to the EIB for management with the EIB’s own assets and appear on the Fund’s statement of financial position as an asset under the heading “Other assets”.

The charge for the year, actuarial gains and losses, and the total defined benefit obligation are calculated annually by qualified external actuaries.

Optional supplementary provident scheme

The optional supplementary provident scheme is a de-fined contribution pension scheme, funded by contribu-tions from staf f. It is accounted for on the basis of the