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subsequently measured at fair value. Any gains or losses arising from changes in fair value on derivatives during the year are taken to the income statement. Additionally, the Group designates some forward contracts as hedges of net investments in foreign operations. Gains and losses from these contracts are recorded directly in other comprehensive income and will be recycled to the income statement on disposal of the underlying investment.The Group does not enter into any derivatives without underlying exposure.(e) Foreign Currency TranslationThe Group%u2019s financial statements are presented in Swiss francs (CHF), which is also the parent%u2019s functional currency. Income statements of foreign entities are translated into CHF at the average exchange rates for the year, while the statements of financial position are translated at the yearend exchange rates as of December 31. Exchange differences arising from the translation of the net investment in foreign subsidiaries and associated undertakings, and of borrowings that hedge such investments, are included in other comprehensive income. On disposal of a foreign entity, the accumulated exchange differences are recognized in the income statement as part of the gain or loss on sale.Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Non-monetary items are carried at historical cost using the spot rate at acquisition.(f) Intangible AssetsExpenditure to acquire distribution contracts, patents, trademarks and licenses is capitalized and amortized using the straight-line method over their useful lives, not exceeding 20 years.Software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized using the straight-line method over their estimated useful lives (3 to 10 years).(g) Property, Plant, and EquipmentProperty, plant and equipment is initially recorded at cost. The Group applies the straight-line depreciation method.Such tangible fixed assets are depreciated to their residual values over their estimated useful life as follows:Buildings 25 to 35 yearsMachinery/tools, furniture/fixtures 5 to 10 yearsIT/communication 3 to 5 yearsVehicles 5 yearsLeasehold improvements are depreciated over the shorter of their useful life and the remainder of the non-cancellable lease term.(h) Impairment of AssetsGoodwillGoodwill is tested for impairment at least annually and upon the occurrence of an indication of impairment. The impairment tests are performed annually at the same time each year at the cash-generating unit (CGU) level. The Group defines its CGUs based on the way that it monitors economic benefits from the acquired goodwill and intangibles. The impairment tests are performed by comparing the carrying value of the assets of these CGUs with their recoverable amount. The recoverable amount is the greater of the fair value less cost of disposal and value-in-use. Generally, the Group starts with a value-in-use calculation based on the future projected free cash flows discounted at an appropriate pre-tax rate of return. The discount rate reflects the current assessment of the time value of money and the risks specific to the CGUs (essentially country risks).Impairment of Property, Plant and Equipment, andFinite-life Intangible AssetsConsideration is given at each financial reporting date determining whether there is any indication of impairment of the carrying amount of the Group%u2019s property, plant and equipment, right-of-use assets and finite-life intangible assets. If any indication exists, an asset%u2019s or CGUs recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the fair value less costs of disposal and value-in-use. In assessing the value-in-use, the estimated future cash flows are discounted to their present value based on a country-specific discount of the country where the assets are located, adjusted for risks specific to the asset.(i) LeasesAt inception of a contract, the Group assesses whether the contract is, or contains, a lease. 64 Consolidated Financial Statements DKSH Group