| 16. | Intangible Assets |
| (1) | Intangible assets as of December 31, 2017 and 2016 are as follows: |
| (In millions of won) | ||||||||||||||||
| December 31, 2017 | ||||||||||||||||
| Acquisition cost |
Accumulated amortization |
Accumulated impairment |
Carrying amount |
|||||||||||||
|
Frequency usage rights |
￦ | 4,843,955 | (2,667,015 | ) | — | 2,176,940 | ||||||||||
|
Land usage rights |
65,841 | (50,091 | ) | — | 15,750 | |||||||||||
|
Industrial rights |
166,082 | (54,735 | ) | — | 111,347 | |||||||||||
|
Development costs |
140,460 | (134,828 | ) | (1,529 | ) | 4,103 | ||||||||||
|
Facility usage rights |
153,438 | (116,987 | ) | — | 36,451 | |||||||||||
|
Customer relations |
20,796 | (16,761 | ) | — | 4,035 | |||||||||||
|
Club memberships(*1) |
108,382 | — | (34,768 | ) | 73,614 | |||||||||||
|
Other(*2) |
3,911,749 | (2,733,485 | ) | (13,539 | ) | 1,164,725 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| ￦ | 9,410,703 | (5,773,902 | ) | (49,836 | ) | 3,586,965 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (In millions of won) | ||||||||||||||||
| December 31, 2016 | ||||||||||||||||
| Acquisition cost |
Accumulated amortization |
Accumulated impairment |
Carrying amount |
|||||||||||||
|
Frequency usage rights |
￦ | 4,843,955 | (2,263,127 | ) | — | 2,580,828 | ||||||||||
|
Land usage rights |
65,148 | (44,314 | ) | — | 20,834 | |||||||||||
|
Industrial rights |
160,897 | (39,697 | ) | — | 121,200 | |||||||||||
|
Development costs |
141,727 | (136,446 | ) | (410 | ) | 4,871 | ||||||||||
|
Facility usage rights |
151,906 | (110,118 | ) | — | 41,788 | |||||||||||
|
Customer relations |
19,742 | (13,090 | ) | — | 6,652 | |||||||||||
|
Club memberships(*1) |
113,161 | — | (39,122 | ) | 74,039 | |||||||||||
|
Other(*2) |
3,315,921 | (2,386,992 | ) | (2,787 | ) | 926,142 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| ￦ | 8,812,457 | (4,993,784 | ) | (42,319 | ) | 3,776,354 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (*1) | Club memberships are classified as intangible assets with indefinite useful life and are not amortized. |
| (*2) | Other intangible assets primarily consist of computer software and usage rights to a research facility which the Group built and donated, and the Group is given rights-to-use for a definite number of years in turn. |
| (2) | Details of the changes in intangible assets for the years ended December 31, 2017 and 2016 are as follows: |
| (In millions of won) | ||||||||||||||||||||||||||||||||||||
| 2017 | ||||||||||||||||||||||||||||||||||||
| Beginning balance |
Acquisition | Disposal | Transfer (*1) |
Amortization | Impair- ment (*2) |
Business combina- tion(*3) |
Others | Ending balance |
||||||||||||||||||||||||||||
|
Frequency usage rights |
￦ | 2,580,828 | — | — | — | (403,888 | ) | — | — | — | 2,176,940 | |||||||||||||||||||||||||
|
Land usage rights |
20,834 | 3,689 | (972 | ) | 200 | (8,001 | ) | — | — | — | 15,750 | |||||||||||||||||||||||||
|
Industrial rights |
121,200 | 2,677 | (28 | ) | (5,635 | ) | (6,870 | ) | — | 4 | (1 | ) | 111,347 | |||||||||||||||||||||||
|
Development costs |
4,871 | 3,813 | (9 | ) | (793 | ) | (2,660 | ) | (1,119 | ) | — | — | 4,103 | |||||||||||||||||||||||
|
Facility usage rights |
41,788 | 2,805 | (36 | ) | 129 | (8,235 | ) | — | — | — | 36,451 | |||||||||||||||||||||||||
|
Customer relations |
6,652 | 1,054 | — | — | (3,671 | ) | — | — | — | 4,035 | ||||||||||||||||||||||||||
|
Club memberships |
74,039 | 5,023 | (3,452 | ) | 122 | — | (769 | ) | — | (1,349 | ) | 73,614 | ||||||||||||||||||||||||
|
Other |
926,142 | 127,396 | (19,698 | ) | 503,277 | (369,546 | ) | (16,605 | ) | 14,118 | (359 | ) | 1,164,725 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| ￦ | 3,776,354 | 146,457 | (24,195 | ) | 497,300 | (802,871 | ) | (18,493 | ) | 14,122 | (1,709 | ) | 3,586,965 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| (*1) | Includes reclassification from advance payments and property and equipment. |
| (*2) | The Group recognized the difference between recoverable amount and the carrying amount of club memberships amounting to ￦18,493 million as impairment loss for the year ended December 31, 2017. |
| (*3) | Includes intangible assets acquired as a result of IRIVER LIMITED’s purchase and merge of S.M. LIFE DESIGN COMPANY INC. and SM mobile communications Co., Ltd. during the year ended December 31, 2017. |
| (In millions of won) | ||||||||||||||||||||||||||||||||
| 2016 | ||||||||||||||||||||||||||||||||
| Beginning balance |
Acquisition | Disposal | Transfer (*2) |
Amortiza -tion |
Impair- ment(*3) |
Business combina- tion |
Ending balance |
|||||||||||||||||||||||||
|
Frequency usage rights(*1) |
￦ | 1,103,517 | 1,810,076 | — | — | (332,765 | ) | — | — | 2,580,828 | ||||||||||||||||||||||
|
Land usage rights |
26,576 | 5,338 | (1,921 | ) | — | (9,159 | ) | — | — | 20,834 | ||||||||||||||||||||||
|
Industrial rights |
116,542 | 6,226 | (148 | ) | 5,004 | (6,424 | ) | — | — | 121,200 | ||||||||||||||||||||||
|
Development costs |
7,472 | 1,404 | — | 338 | (3,933 | ) | (410 | ) | — | 4,871 | ||||||||||||||||||||||
|
Facility usage rights |
48,019 | 2,181 | (50 | ) | 231 | (8,593 | ) | — | — | 41,788 | ||||||||||||||||||||||
|
Customer relations |
7,175 | 499 | — | — | (4,051 | ) | — | 3,029 | 6,652 | |||||||||||||||||||||||
|
Club memberships |
91,507 | 7,983 | (7,624 | ) | — | — | (17,827 | ) | — | 74,039 | ||||||||||||||||||||||
|
Other |
903,976 | 141,045 | (20,306 | ) | 228,110 | (323,397 | ) | (3,286 | ) | — | 926,142 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| ￦ | 2,304,784 | 1,974,752 | (30,049 | ) | 233,683 | (688,322 | ) | (21,523 | ) | 3,029 | 3,776,354 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (*1) | During the year ended December 31, 2016, the Parent Company acquired the frequency right for bandwidth blocs in the 2.6 GHz band for ￦1,330,100 million at the spectrum auction held by the Ministry of Science, ICT and Future Planning (MSIP) of Korea and made the initial payment in accordance with the terms of the agreement in August 2016. The remaining consideration will be paid on an annual installment basis for 10 years from August 2016. In addition, the Parent Company extended frequency usage rights for 2.1 GHz band for ￦568,500 million with the initial payment made to MSIP during the year ended December 31, 2016. The remaining consideration will be paid on an annual installment basis for 5 years from December 2016. |
| (*2) | Includes reclassification from advance payments and property and equipment. |
| (*3) | The Group recognized the difference between recoverable amount and the carrying amount of intangible assets, amounting to ￦21,523 million as impairment loss for the year ended December 31, 2016. |
| (3) | Research and development expenditures recognized as expense for the years ended December 31, 2017, 2016 and 2015 are as follows: |
| 2017 | 2016 | 2015 | ||||||||||
|
Research and development costs expensed as incurred |
￦ | 395,276 | 344,787 | 315,790 | ||||||||
| (4) | The carrying amount and residual useful lives of frequency usage rights as of December 31, 2017 are as follows, all of which are amortized on a straight-line basis: |
| (In millions of won) | ||||||||||||||
| Amount |
Description |
Commencement of amortization |
Completion of amortization |
|||||||||||
|
800MHz license |
￦ | 141,904 | Frequency usage rights relating to CDMA and LTE service | Jul. 2011 | Jun. 2021 | |||||||||
|
1.8GHz license |
502,480 | Frequency usage rights relating to LTE service | Sept. 2013 | Dec. 2021 | ||||||||||
|
WiBro license |
2,957 | WiBro service | Mar. 2012 | Mar. 2019 | ||||||||||
|
2.6GHz license |
1,092,770 | Frequency usage rights relating to LTE service | Sept. 2016 | Dec. 2026 | ||||||||||
|
2.1GHz license |
436,829 | Frequency usage rights relating to W-CDMA and LTE service | Dec. 2016 | Dec. 2021 | ||||||||||
|
|
|
|||||||||||||
| ￦ | 2,176,940 | |||||||||||||
|
|
|
|||||||||||||