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1.13 Goodwill
Goodwill arising on acquisition of a business is carried at cost, as established at the date of the acquisition of the business, less accumulated
impairment losses.
Goodwill is tested annually for impairment. For the purposes of impairment testing, goodwill is allocated to each of the group’s cash-generating
units that are expected to benefit from the synergies of the business combination. Goodwill is monitored at an operational segment level.
1.14 Intangible assets
Software development costs are capitalised and are stated at cost less accumulated amortisation and accumulated impairment losses.
Other intangible assets acquired by the group are stated at cost less accumulated amortisation and accumulated impairment losses.
Expenditure on research, internally generated goodwill and brands is recognised in the statement of profit or loss as an expense when incurred.
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is expensed as incurred.
Amortisation is charged to the statement of profit or loss on a straight-line basis over the estimated useful lives of intangible assets unless such
lives are indefinite. Intangible assets with an indefinite useful life are systematically tested for impairment at reporting date. Other intangible
assets are amortised from the date they are available for use. The estimated useful lives are currently:
Patents, trademarks, tradenames and other intangibles
3 to 29 years
Computer software
3 to 8 years
1.15 Impairment of assets
The carrying value of assets is reviewed annually to assess whether there is any indication of impairment. If any such indication exists, the
recoverable amount of the asset is estimated. Where the carrying value exceeds the estimated recoverable amount, such assets are written
down to their recoverable amount.
The recoverable amount of cash-generating units to which goodwill is allocated is estimated annually each year. For assets that have an
indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each reporting date.
Impairment losses are recognised whenever the carrying amount of the asset or a cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in the statement of profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to
cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis.
A cash-generating unit is not larger than any operational segment.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition
of the financial asset, the estimated future cash flows of the investment have been impacted.
An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. For unlisted shares
classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective
evidence of impairment.
For all other financial assets, objective evidence of impairment could include:
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significant financial difficulty of the counterparty; or
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default in interest or principal payments; or
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it becoming probable that the counterparty will enter bankruptcy or financial reorganisation.
Bidcorp Limited Annual integrated report 2016 |
Page 71
Financial overview