74 Dialog Semiconductor Plc | Annual report and accounts 2012  |  Section 4 | Consolidated financial statements and notes Notes to the consolidated financial statements 2. Summary of significant accounting policies continued Business Combinations  Deferred tax assets  For the year ended 31 December 2012  Although the estimates of the useful lives of certain assets, assumptions concerning the macroeconomic environment and developments in the industry  in which the Group operate, and estimates of the discounted future cash flows are believed to be appropriate, changes in assumptions or circumstances  could require changes in the analysis. This could lead to impairment losses in the future or – except in the case of goodwill – to reversals of impairment  losses. The useful lives of certain assets relate to the anticipated period of productive use of the assets or contractual terms. In accordance with business combination accounting, we allocate the purchase price of acquired companies to the tangible and intangible assets  acquired and liabilities assumed, based on their estimated fair values. We engage third-party appraisal firms to assist management in determining the  fair values of certain assets acquired and liabilities assumed. Such valuations require management to make significant estimates and assumptions,  especially with respect to intangible assets. Management makes estimates of fair value based upon assumptions believed to be reasonable. These estimates are based on historical experience and  information obtained from the management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain assets acquired  and liabilities assumed include but are not limited to: future expected cash flows from the sale of products, and engineering service sales, the acquired  company’s brand awareness and discount rate. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such  assumptions, estimates or actual results. Subject to these estimates are the fair values recorded as shown in note 4 (Business Combinations).  Goodwill is allocated to cash generating units or groups of cash generating units, that is expected to benefit from the synergies of the business  combination, irrespective of whether other assets or liabilities of the acquire are assigned to these units or group of units. The estimates of these  synergies include but are not limited to: future cash flows from the sale of products, changes in fair values of cash generating units and discount rate.  We refer to note 4 (Allocation of Goodwill to Cash Generating Units and Goodwill Impairment Testing) for the applied approach and assumptions.  Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses  can be utilised. Significant management judgement on projected future taxable profits and cash flows is required to determine the amount of deferred tax assets that  can be recognised, based upon the likely timing of future taxable profits, together with future tax planning strategies. At year end 2012, net deferred  tax assets amounting to US$3,234,000 were recognised (2011: US$13,946,000). Impaired deferred tax assets at 31 December 2012 were nil (2011:  US$1,105,000).  Further information regarding the assessment of future taxable income is disclosed in note 5.  Estimation of useful lives 