FRENCKEN GROUP LIMITED
ANNUAL REPORT 2015
58
NOTES TO FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT’D)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(d) Intangible assets (Cont’d)
(ii) Other intangible assets (Cont’d)
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually,
or more frequently if the events and circumstances indicate that the carrying value may be impaired either
individually or at cash generating unit level. Such other intangible assets are not amortised. The useful
life of an other intangible asset with an indefinite useful life is reviewed annually to determine whether
the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to
definite is made on a prospective basis.
Gains or losses arising from de-recognition of other intangible asset are measured as the difference
between the net disposal proceed and the carrying amount of the asset and are recognised in income
statement when the asset is derecognised.
(a)
Deferred development costs
Deferred development costs arising from development expenditures on an individual project are
recognised as an intangible asset when the Group can demonstrate the technical feasibility of
completing the intangible assets so that it will be available for use or sale, its intention to complete
and its ability to use or sell the asset, how the asset will generate future economic benefits, the
availability of resources to complete and the ability to measure reliably the expenditures during
the development.
Following the initial recognition of the deferred development costs as an intangible asset, it is
carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation
of the deferred development costs begin when development is complete and the asset is available
to use. Deferred development costs have a finite useful life and are amortised over the period of
expected units of production or based on the estimated useful lives of the related projects.
(e) Impairment of non-financial assets
(i)
Goodwill on consolidation
Goodwill on consolidation recognised separately as an intangible asset is tested for impairment annually
and whenever there is indication that the goodwill may be impaired.
For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-
generating-units (“CGU”) expected to benefit from synergies arising from the business combination.
An impairment loss is recognised when the carrying amount of CGU, including the goodwill, exceeds the
recoverable amount of the CGU. Recoverable amount of the CGU is the higher of the CGU’s fair value
less cost to sell and value-in-use.
The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated
to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each
asset in the CGU.
An impairment loss on goodwill is recognised in the income statement and is not reversed in a subsequent
period.
