Since 2003, with the application of IAS 38 “Intangible Assets”, EADS has assessed whether product-related development costs qualify for capitalisation as internally generated intangible assets. Criteria for capitalisation are strictly applied. All research and development costs not meeting the IAS 38 criteria are expensed as incurred in the consolidated income statement.

In 2005, €293 million of product-related development costs were capitalised in accordance with IAS 38 (including €259 million relating to the Airbus A380 programme). €411 million was capitalised in 2006 (including €335 million relating to the Airbus A380 programme), and €93 million was capitalised in 2007 (with no capitalisation relating to the Airbus A380 programme following its entry into the production phase at the end of 2006).

Capitalised development costs are generally amortised over the estimated number of units produced. If the number of units produced cannot be estimated reliably, capitalised development costs are amortised over the estimated useful life of the internally generated intangible asset. Amortisation of capitalised development costs is recognised in cost of sales. In 2007, amortisation of capitalised development costs amounted to €(46) million, most of which related to the Airbus A380 programme. Amortisation in respect of the Airbus A380 programme began in 2007 following its entry into the production phase at the end of 2006.

Internally generated intangible assets are reviewed for impairment annually when the asset is not yet in use and subsequently whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.