12 » Right-of-Use Assets
The company recognized right-of-use assets in an amount of € 2.4 billion (2019: € 2.9 billion). The following table presents a reconciliation of the carrying amount of right-of-use assets:
|
|
Land and buildings |
|
Technical equipment and machinery |
|
Other equipment, furniture and fixtures |
|
Right-of-use assets |
|---|---|---|---|---|---|---|---|---|
January 1, 2020 |
|
2,785 |
|
100 |
|
46 |
|
2,931 |
Additions |
|
456 |
|
36 |
|
14 |
|
507 |
Disposals |
|
(75) |
|
(0) |
|
(8) |
|
(83) |
Depreciation |
|
(611) |
|
(48) |
|
(25) |
|
(684) |
Impairment losses |
|
(67) |
|
– |
|
(1) |
|
(68) |
Currency translation differences |
|
(161) |
|
(0) |
|
(2) |
|
(162) |
Other changes |
|
(10) |
|
(0) |
|
(0) |
|
(10) |
December 31, 2020 |
|
2,317 |
|
88 |
|
25 |
|
2,430 |
|
|
Land and buildings |
|
Technical equipment and machinery |
|
Other equipment, furniture and fixtures |
|
Right-of-use assets |
|---|---|---|---|---|---|---|---|---|
January 1, 2019 |
|
2,751 |
|
126 |
|
61 |
|
2,938 |
Additions |
|
672 |
|
4 |
|
10 |
|
686 |
Depreciation |
|
(596) |
|
(30) |
|
(25) |
|
(651) |
Impairment losses |
|
(13) |
|
– |
|
– |
|
(13) |
Other changes |
|
(29) |
|
0 |
|
(0) |
|
(29) |
December 31, 2019 |
|
2,785 |
|
100 |
|
46 |
|
2,931 |
As a general principle, it is regularly assessed whether there are any indications that right-of-use assets might be impaired. Irrespective of the existence of such indications, right-of-use assets in adidas’ own-retail stores are tested annually for impairment where the recoverable amount is calculated using the ‘discounted cash flow method’ as part of determining the profitability of the adidas’ own-retail stores respectively.
In light of the coronavirus pandemic, facts and circumstances indicated that non-current assets (e.g. property, plant, and equipment, right-of use assets and intangible assets including goodwill) might be impaired. In addition to the impairment testing for individual assets, impairment tests were carried out for all significant non-current assets at the respective level of cash-generating units due to this ‘triggering event’ and related reassessment of the business development, under consideration of the expected consequences of the coronavirus pandemic on March 31, June 30 and December 31, 2020. These were based on updated financial planning and estimates. Given the unforeseeable future consequences of the coronavirus pandemic, these estimates and judgments are subject to an increased level of uncertainty. However, future changes in expected cash flows and discount rates may lead to (additional) impairments and reversals of impairment losses.
Impairment losses for right-of-use assets recognized in the presented periods mainly relate to the company’s own-retail activities for which contrary to expectations there will be an insufficient flow of future economic benefits. The expenses from impairments in 2020 are distributed to Europe with € 31 million; North America with € 16 million; Asia-Pacific with € 19 million and Emerging Markets with € 2 million. Reversals of impairment losses in an amount of € 1 million are represented under impairment losses.
Income from sub-leasing of right-of-use assets recognized in the consolidated income statement in 2020 amounted to € 3.2 million (2019: € 3.3 million).
Further information on total depreciation and amortization expenses, impairment losses and reversals of impairment losses is provided in these Notes. Note 33