Full Report - Fraser and Neave Limited

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2006
2. ACCOUNTING POLICIES (cont’d)
2.13 Intangible Assets (cont’d)
Internally generated goodwill and internally generated intangible asset arising from research are not
capitalised and the expenditure is charged to the profit statement when it is incurred. Internally generated
intangible asset arising from development is capitalised only when its future recoverability can reasonably be
regarded as assured.
Intangible assets are tested for impairment annually or more frequently if events or changes in circumstances
indicate that the carrying value might be impaired. Useful lives are also examined on an annual basis and
adjustments, where applicable, are made on a prospective basis.
a) Deferred publishing development costs are amortised in accordance with their estimated economic
useful lives, upon completion of published products as follows:
Curriculum General Reference
1st year 33% 50% 33%
2nd year 33% 30% 27%
3rd year 34% 20% 20%
4th year – – 13%
5th year – – 7%
At each balance sheet date, the Group assesses whether there is any indication of impairment. If any
such indication exists, the recoverable amount is estimated.
b) Goodwill on acquisition is identified as being the excess of the cost of acquisition over the Group’s
share of net fair value of the identifiable assets, liabilities and contingent liabilities acquired as at the
date of acquisition. Where the cost of acquisition is lower than the Group’s share of net fair value
of the identifiable assets, liabilities and contingent liabilities acquired, the difference is recognised as
negative goodwill. Negative goodwill is recognised immediately in profit statement.
Positive goodwill is carried at cost less any accumulated impairment loss. Goodwill is subjected to
impairment test annually or more frequently if events or changes in circumstances indicate that the
carrying value might be impaired.
Positive goodwill acquired is allocated to the cash-generating units (“CGU”) expected to benefit
from the acquisition synergies. An impairment loss is recognised in the income statement when the
carrying amount of the CGU, including the goodwill, exceeds the recoverable amount of the CGU. The
recoverable amount is the higher of the CGU’s fair value less costs to sell and its value in use.
The total impairment loss 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.
Impairment loss on goodwill is not reversed in a subsequent period.
100 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2006