95 ANNUAL REPORT 2010 Software and other intangible assets are carried at cost less  accumulated depreciation and impairment losses. Depreciation  of the asset is over its useful life as the future economic  benefits emerge and is recognized in the income statement as  an expense. The depreciation period and pattern are reviewed  at each reporting date, with any changes recognized in the  income statement. An intangible asset is derecognized when it is disposed of or  when no future economic benefits are expected from its use or  disposal.  Investments comprise financial assets, excluding derivatives, as  well as investments in real estate. Financial assets are recognized on the trade date when the  Group becomes a party to the contractual provisions of the  instrument and are classified for accounting purposes  depending on the characteristics of the instruments and the  purpose for which they were purchased.  The following financial assets are measured at fair value  through profit or loss: financial assets held for trading, financial  assets managed on a fair value basis in accordance with the  Group’s risk management and investment strategy and financial  assets containing an embedded derivative that is not closely  related and that cannot be reliably bifurcated. In addition, in  certain instances the Group designates financial assets to this  category when by doing so a potential accounting mismatch in  the financial statements is eliminated or significantly reduced. Financial assets with fixed or determinable payments that are  not quoted in an active market and that the Group does not  intend to sell in the near future or for which the holder may not  recover substantially all of its initial investment, other than  because of credit deterioration, are accounted for as loans. To  the extent that the Group has the intention and ability to hold a  quoted financial asset with fixed payments to the maturity date,  it is classified as held-to-maturity. All remaining non-derivative financial assets are classified as  available-for-sale.  Financial assets are initially recognized at fair value excluding  interest accrued to date plus, in the case of a financial asset not  at fair value through profit or loss, any directly attributable  incremental transaction costs. The fair value of an asset is the amount for which it could be  exchanged between knowledgeable, willing parties in an arm’s  length transaction. For quoted financial assets for which there  is an active market, the fair value is the bid price at the balance  sheet date. In the absence of an active market, fair value is  estimated by using present value based or other valuation  techniques. Where discounting techniques are applied, the  discount rate is based on current market rates applicable to  financial instruments with similar characteristics. The valuation  techniques that include non-market observable inputs can  result in a different outcome than the actual transaction price  at which the asset was acquired. Such differences are not  recognized in the income statement immediately but are  deferred. They are released over time to the income statement  in line with the change in factors (including time) that market  participants would consider in setting a price for the asset. The consolidated financial statements provide information on  the fair value of all financial assets, including those carried at  amortized cost where the values are provided in the notes to  the financial statements. The amortized cost of a debt instrument is the amount at which  it is measured at initial recognition minus principal repayments,  plus or minus the cumulative amortization of any difference  between the initial amount and the maturity amount, and minus  any reduction for impairment. The effective interest rate  method is a method of calculating the amortized cost and of  allocating the interest income or expense over the relevant  period. The effective interest rate is the rate that exactly  discounts estimated future cash payments or receipts through  the expected life of the debt instrument or, when appropriate,  a shorter period to the net carrying amount of the instrument.  When calculating the effective interest rate, all contractual  terms are considered. Possible future credit losses are not  taken into account. Charges and interest paid or received  between parties to the contract that are an integral part of the  effective interest rate, transaction costs and all other premiums  or discounts are included in the calculation. Loans and financial assets held-to-maturity are subsequently  carried at amortized cost using the effective interest rate  method. Financial assets at fair value through profit or loss are  measured at fair value with all changes in fair value recognized  in the income statement as incurred. Available-for-sale assets  are recorded at fair value with unrealized changes in fair value  recognized in other comprehensive income. Financial assets  that are designated as hedged items are measured in  accordance with the requirements for hedge accounting. Amortized cost NOTE 2.8 INVESTMENTS A. FINANCIAL ASSETS, EXCLUDING DERIVATIVES Classifi cation Fair value Measurement SHARPENING OUR FOCUS