Download the Annual report 2011 - Unisa

UNISA ANNUAL REPORT 2011
Costs associated with maintaining computer software programmes are capitalised as intangible assets only if
they qualify for recognition. In all other cases, these costs are recognised as an expense as incurred.
Costs that are directly associated with the development and production of identifiable and unique software
products controlled by the University and that will probably generate economic benefits exceeding one year
are recognised as intangible assets. Direct costs include the costs of software development, employees’ costs
and an appropriate allocation of relevant overheads.
Computer software is amortised on a straight-line basis over its estimated useful life from the date it becomes
available for use.
The current useful life is:
• Capitalised software - 3 years (2010 – 3 years)
Subsequent expenditure on capitalised intangible assets is capitalised when it increases the future economic
benefits embodied in the specific asset to which it relates and the costs can be measured reliably. All other
expenditure is expensed as incurred.
2.8 IMPAIRMENT OF FINANCIAL AND NON-FINANCIAL ASSETS
The carrying amounts of the University’s assets other than inventories are reviewed at each reporting date to
determine whether there is any indication of impairment. If there is any indication that an asset may be impaired,
its recoverable amount is estimated.
The allowance accounts in respect of student and other receivables are used to record impairment losses unless
the University is satisfied that no recovery of the amount owing is possible. At that point the amounts
considered irrecoverable are written off directly against the financial asset.
The impairment of student receivables, loans and other receivables is established when there is objective evidence
that the University will not be able to collect all amounts due in accordance with the original terms of the
credit/loans given, and includes an assessment of recoverability based on historical trend analyses and events
that exist at the reporting date. In assessing collective impairment the University uses historical trends of the
probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s
judgement. The amount of the impairment adjustment is the difference between the carrying value and the
present value. For debtors, impairment losses are recognised in profit or loss.
For loans and receivables the adjustment is established when there is objective evidence that the University
will not be able to collect all amounts due according to the original terms of the loan or receivable. Objective
evidence included default of delinquency by a debtor or adverse changes in the payment status of debtors to
the University.
An impairment loss is recognised if the carrying amount of a non-financial asset or its cash-generating unit
exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates
cash flows that are largely independent from other assets and groups.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating
units are allocated to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata
basis.
2.8.1 Calculation of recoverable amount
The recoverable amount of the University’s investments in receivables carried at amortised cost is calculated as
the present value of estimated future cash flows, discounted at the original effective interest rate (the effective
interest rate computed at initial recognition of these financial assets). Receivables with a short duration are
not discounted.
The recoverable amount of non-financial assets is the greater of their value in use and its fair value less cost
to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a
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