XML 172 R15.htm IDEA: XBRL DOCUMENT v3.20.1
Intangible Assets and Non-current Asset Impairment
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Intangible Assets and Non-current Asset Impairment
10.
Intangible Assets and
Non-current
Asset Impairment
 
 
(a)
Changes in intangible assets for the year ended December 31, 2018 are as follows:
 
(In millions of won)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intellectual

property
rights
 
 
Software
 
 
Member-
ships
 
 
Development
costs
 
 
Construction

-in-progress

(software)
 
 
Customer

relationships
 
 
Technology
 
 
Good-

will
 
 
Others

(*2)
 
 
Total
 
Acquisition cost as of January 1, 2018
 
W
895,721
 
 
 
898,278
 
 
 
54,985
 
 
 
1,769,998
 
 
 
30,933
 
 
 
59,176
 
 
 
11,074
 
 
 
103,048
 
 
 
13,077
 
 
 
3,836,290
 
Accumulated amortization as of January 1, 2018
 
 
(648,755
) 
 
 
(736,788
) 
 
 
—  
 
 
 
(1,473,238
) 
 
 
—  
 
 
 
(31,337
) 
 
 
(8,490
) 
 
 
—  
 
 
 
(13,076
) 
 
 
(2,911,684
) 
Accumulated impairment loss as of January 1, 2018
 
 
—  
 
 
 
—  
 
 
 
(11,785
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(11,785
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value as of January 1, 2018
 
W
246,966
 
 
 
161,490
 
 
 
43,200
 
 
 
296,760
 
 
 
30,933
 
 
 
27,839
 
 
 
2,584
 
 
 
103,048
 
 
 
1
 
 
 
912,821
 
Additions - internally developed
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
372,835
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
372,835
 
Additions - external purchases
 
 
24,596
 
 
 
—  
 
 
 
2,844
 
 
 
—  
 
 
 
100,820
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
128,260
 
Amortization(*1)
 
 
(43,437
) 
 
 
(80,159
) 
 
 
—  
 
 
 
(302,685
) 
 
 
—  
 
 
 
(3,517
) 
 
 
(1,107
) 
 
 
—  
 
 
 
(1
) 
 
 
(430,906
) 
Disposals
 
 
—  
 
 
 
—  
 
 
 
(721
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(721
) 
Impairment loss
 
 
—  
 
 
 
—  
 
 
 
(82
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(82
) 
Reversal of impairment loss
 
 
—  
 
 
 
—  
 
 
 
348
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
348
 
Transfer from
construction-in-progress
 
 
—  
 
 
 
95,028
 
 
 
449
 
 
 
—  
 
 
 
(95,028
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
449
 
Effect of movements in exchange rates
 
 
1,896
 
 
 
1,240
 
 
 
1
 
 
 
—  
 
 
 
238
 
 
 
—  
 
 
 
—  
 
 
 
1,263
 
 
 
—  
 
 
 
4,638
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value as of December 31, 2018
 
W
230,021
 
 
 
177,599
 
 
 
46,039
 
 
 
366,910
 
 
 
36,963
 
 
 
24,322
 
 
 
1,477
 
 
 
104,311
 
 
 
—  
 
 
 
987,642
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition cost as of December 31, 2018
 
W
926,969
 
 
 
992,139
 
 
 
57,560
 
 
 
2,142,832
 
 
 
36,963
 
 
 
59,176
 
 
 
11,075
 
 
 
104,311
 
 
 
13,077
 
 
 
4,344,102
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated amortization as of December 31, 2018
 
W
(696,948
) 
 
 
(814,540
) 
 
 
—  
 
 
 
(1,775,922
) 
 
 
—  
 
 
 
(34,854
) 
 
 
(9,598
) 
 
 
—  
 
 
 
(13,077
) 
 
 
(3,344,939
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated impairment loss as of December 31, 2018
 
W
—  
 
 
 
—  
 
 
 
(11,521
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(11,521
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*1)
The Group has classified the amortization as manufacturing overhead costs, selling expenses, administrative expenses and research and development expenses.
(*2)
Others mainly consist of rights to use electricity and gas supply facilities.
 
 
(b)
Changes in intangible assets for the year ended December 31, 2019 are as follows:
 
(In millions of won)
 
Intellectual

property
rights
 
 
Software
 
 
Member-
ships
 
 
Development
costs
 
 
Construction

-in-progress

(software)
 
 
Customer

relationships
 
 
Technology
 
 
Good-

will
 
 
Others

(*2)
 
 
Total
 
Acquisition cost as of January 1, 2019
 
W
926,969
 
 
 
992,139
 
 
 
57,560
 
 
 
2,142,832
 
 
 
36,963
 
 
 
59,176
 
 
 
11,075
 
 
 
104,311
 
 
 
13,077
 
 
 
4,344,102
 
Accumulated amortization as of January 1, 2019
 
 
(696,948
) 
 
 
(814,540
) 
 
 
—  
 
 
 
(1,775,922
) 
 
 
—  
 
 
 
(34,854
) 
 
 
(9,598
) 
 
 
—  
 
 
 
(13,077
) 
 
 
(3,344,939
) 
Accumulated impairment loss as of January 1, 2019
 
 
—  
 
 
 
—  
 
 
 
(11,521
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(11,521
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value as of January 1, 2019
 
W
230,021
 
 
 
177,599
 
 
 
46,039
 
 
 
366,910
 
 
 
36,963
 
 
 
24,322
 
 
 
1,477
 
 
 
104,311
 
 
 
—  
 
 
 
987,642
 
Additions - internally developed
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
437,945
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
437,945
 
Additions - external purchases
 
 
28,397
 
 
 
—  
 
 
 
846
 
 
 
—  
 
 
 
90,369
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
3
 
 
 
119,615
 
Amortization (*1)
 
 
(42,550
) 
 
 
(82,016
) 
 
 
—  
 
 
 
(297,959
) 
 
 
—  
 
 
 
(2,637
) 
 
 
(1,108
) 
 
 
—  
 
 
 
(2
) 
 
 
(426,272
) 
Disposals
 
 
—  
 
 
 
(239
) 
 
 
(1,816
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(2,055
) 
Impairment loss (*3)(*4)
 
 
(29,152
) 
 
 
(8,905
) 
 
 
—  
 
 
 
(131,713
) 
 
 
—  
 
 
 
(21,685
) 
 
 
—  
 
 
 
(57,995
) 
 
 
—  
 
 
 
(249,450
) 
Reversal of impairment loss
 
 
—  
 
 
 
—  
 
 
 
960
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
960
 
Transfer from
construction-in-progress
 
 
—  
 
 
 
111,359
 
 
 
—  
 
 
 
—  
 
 
 
(112,159
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(800
) 
Effect of movements in exchange rates
 
 
4,318
 
 
 
347
 
 
 
23
 
 
 
—  
 
 
 
72
 
 
 
—  
 
 
 
—  
 
 
 
1,103
 
 
 
—  
 
 
 
5,863
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value as of December 31, 2019
 
W
191,034
 
 
 
198,145
 
 
 
46,052
 
 
 
375,183
 
 
 
15,245
 
 
 
—  
 
 
 
369
 
 
 
47,419
 
 
 
1
 
 
 
873,448
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition cost as of December 31, 2019
 
W
959,683
 
 
 
1,097,290
 
 
 
56,612
 
 
 
2,580,777
 
 
 
15,245
 
 
 
59,176
 
 
 
11,074
 
 
 
105,414
 
 
 
13,080
 
 
 
4,898,351
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated amortization as of December 31, 2019
 
W
(739,498
) 
 
 
(890,281
) 
 
 
—  
 
 
 
(2,073,881
) 
 
 
—  
 
 
 
(37,491
) 
 
 
(10,705
) 
 
 
—  
 
 
 
(13,079
) 
 
 
(3,764,935
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated impairment loss as of December 31, 2019
 
W
(29,151
) 
 
 
(8,864
) 
 
 
(10,560
) 
 
 
(131,713
) 
 
 
—  
 
 
 
(21,685
) 
 
 
—  
 
 
 
(57,995
) 
 
 
—  
 
 
 
(259,968
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(*1)
The Group has classified the amortization as manufacturing overhead costs, selling expenses, administrative expenses and research and development expenses.
(*2)
Others mainly consist of rights to use electricity and gas supply facilities.
(*3)
During 2019, Display(AD PO) and Lighting CGUs were assessed for impairment, and the impairment losses amounting to
W
131,628 million (
W
26,284 and
W
105,344 million for Display(AD PO) and Lighting CGUs, respectively) were recognized as other expenses. The impairment amount is recognized in goodwill, customer relationships and others. Details of the impairment loss are explained in note 10(e)).
(*4)
The Group recognized an impairment loss amounting to
W
117,822 million in connection with development projects that were terminated after the impairment review.
 
 
(c)
Development of new projects are divided into research activities and development activities. Expenditures on research activities are recognized in profit or loss and qualifying development expenditures are capitalized, respectively.
 
 
(d)
Development costs as of December 31, 2018 and 2019 are as follows:
 
 
(i)
As of December 31, 2018
 
(In millions of won and in years)
  
 
  
 
 
  
 
 
Classification
  
Product
  
Book Value
 
  
Remaining

Useful life
 
Development completed
  
Mobile
  
W
108,467
 
  
 
0.5
 
  
TV
  
 
28,001
 
  
 
0.5
 
  
Notebook
  
 
4,458
 
  
 
0.6
 
  
Others
  
 
9,475
 
  
 
0.5
 
 
  
 
  
 
 
 
  
   
 
  
 
  
W
150,401
 
  
   
 
  
 
  
 
 
 
  
   
Development in process
  
Mobile
  
W
144,679
 
  
 
—  
 
  
TV
  
 
55,580
 
  
 
—  
 
  
Notebook
  
 
9,639
 
  
 
—  
 
  
Others
  
 
6,611
 
  
 
—  
 
 
  
 
  
 
 
 
  
   
 
  
 
  
W
216,509
 
  
   
 
  
 
  
 
 
 
  
   
 
  
 
  
W
366,910
 
  
   
 
  
 
  
 
 
 
  
   
 
 
(ii)
As of December 31, 2019
 
(In millions of won and in years)
  
 
  
 
 
  
 
 
Classification
  
Product
  
Book Value
 
  
Remaining

Useful life
 
Development completed
  
Mobile
  
W
53,350
 
  
 
0.4
 
  
TV
  
 
22,597
 
  
 
0.4
 
  
Notebook
  
 
14,464
 
  
 
0.4
 
  
Others
  
 
12,370
 
  
 
0.7
 
 
  
 
  
 
 
 
  
   
 
  
 
  
W
102,781
 
  
   
 
  
 
  
 
 
 
  
   
Development in process
  
Mobile
  
W
157,483
 
  
 
—  
 
  
TV
  
 
42,587
 
  
 
—  
 
  
Notebook
  
 
46,167
 
  
 
—  
 
  
Others
  
 
26,165
 
  
 
—  
 
 
  
 
  
 
 
 
  
   
 
  
 
  
W
272,402
 
  
   
 
  
 
  
 
 
 
  
   
 
  
 
  
W
375,183
 
  
   
 
  
 
  
 
 
 
  
   
 
 
(e)
Impairment assessment
 
 
(i)
During 2019, the Group has distinguished Display (AD PO) and Lighting businesses as separate CGUs from the existing Display CGU due to the initiation of independent factory production of Display (AD PO) business and the decision of Lighting business planned discontinuance in response to business environmental changes. As of December 31, 2019, goodwill allocated to the Display CGU amounts to
W
47,419 million.
 
 
(ii)
Impairment on assets belonging to all of the CGUs was assessed due to the decision of planned discontinuance of Lighting business and adverse changes in the business environment of Display (AD PO). The recoverable amount of each CGU is estimated based on its value in use. Value in use is calculated using the estimated pre-tax cash flow based on 5-year business plan approved by management. The estimated sales of the Group’s products used in the forecast was determined considering external sources and the Group’s past experience. Management estimated the future pre- tax cash flow based on its past performance and forecasts on market growth. The key assumptions used in the estimation of value in use for Display (AD PO) CGU and Display CGU include revenue and operating expenditures for the forecast period, growth rates for subsequent years (“terminal growth rate”), and discount rate. For all of the CGUs, the terminal growth rate and the discount rate in the estimation of value in use as of December 31, 2019 are as follows.
 
 
  
Lighting(*2)
 
 
Display (AD PO)(*3)
 
 
Display(*4)
 
Discount rate(*1)
  
 
6.1
% 
 
 
6.1
% 
 
 
6.1
% 
Terminal growth rate
  
 
N/A
 
 
 
0.0
% 
 
 
1.0
% 
 
(*1)
The discount rate was calculated using the weighted average cost of equity capital and debt, and the beta of equity capital was calculated as the average of five global listed companies in the same industry and the Group. Cost of debt was calculated by the interest rate of the Group’s publicly issued bonds and debt ratio was determined using the average of the debt ratios of the five global listed companies in the same industry
with
 the Group.
(*2)
As a result of impairment test, the carrying amount of Lighting CGU which produces OLED lighting products was fully impaired with impairment loss of
W
230,867 million recognized as other expenses for the year ended December 31, 2019.
(*3)
As a result of impairment test, the carrying amount of Display(AD PO) CGU which produces plastic OLED mobile products and commenced mass production in 2019, exceeds the recoverable amount of
W
1,729,209 million and an impairment loss of
W
1,395,655 million was recognized as other expenses for the year ended December 31, 2019. The value in use determined for this CGU is sensitive to the discount rate
and terminal growth rate
used in the discounted cash flow model. If the discount rate increases by 0.5%, the value in use would have decreased by
W
259,221 million (15.0%). If the terminal growth rate decreases by 0.5%, the value in use would have decreased by
W
169,626 million (9.8%).
(*4)
As a result of impairment test for Display CGU, the recoverable amount exceeds the carrying amount by
W
3,568,588 million. The value in use determined for this CGU is sensitive to the discount rate and terminal growth rate used in the discounted cash flow model. The discount rate and terminal growth rate would need to increase by 1.06% and decrease by 1.39%, individually (holding all the other assumptions constant) for the estimated recoverable amount to be equal to the carrying amount.