bold spirit - ArcelorMittal South Africa

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ArcelorMittal South Africa
Annual Report 2010
3. SIGNIFICANT ACCOUNTING POLICIES continued
3.11 Intangible assets
Internally generated intangible assets – research and development
Research expenditure is recognised as an expense when incurred. Costs incurred on development projects
(relating to the design and testing of new or improved products) are recognised as intangible assets when the
criteria of IAS 38, Intangible Assets are met.
Other development expenditures that do not meet these criteria are recognised as an expense when incurred.
Development assets are tested for impairment annually, in accordance with IAS 36, Impairment of Assets.
Purchased intangible assets other than goodwill
(i) “Right-of-use” operating licences
The cost of acquisition of operating licences, other than those obtained from the government authorities, are
capitalised at their historical cost as intangible assets, and amortised over the right-of-use period. This period is
reviewed at least annually.
(ii) Non-integrated computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring into
use the specific software. These costs are amortised over their estimated useful lives.
Computer software development costs recognised as assets are amortised over their estimated useful lives,
typically not exceeding seven years.
3.12 Impairment of tangible and intangible assets excluding goodwill
At each statement of financial position date, the group and company review the carrying amounts of
tangible and intangible assets to determine whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). In order to ensure completeness of the impairment
assessment of individual assets, all tangible assets and intangible assets are allocated to the cash-generating
unit to which they belong. An impairment assessment is then undertaken on the individual cash-generating
units.
“Recoverable amount” is defined as the higher of fair value less costs-to-sell and value-in-use. In assessing
value-in-use, the estimated future cash flows are discounted to their present value using a post-tax discount
rate that reflects the weighted average cost of capital of the company.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been recognised for
the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the
statement of comprehensive income.
3.13 Financial assets
Financial assets are recognised and derecognised on the trade date where the purchase or sale of the asset
is under a contract whose terms require delivery within the timeframe established by the market concerned.
These assets are initially measured at fair value, net of transaction costs except for those financial assets
classified as fair value through profit or loss (FVTPL), which are initially measured at fair value.
Financial assets are classified into the following specified categories:
• financial assets at fair value through profit or loss (FVTPL);
• available-for-sale (AFS) financial assets; and
• loans and receivables.
Financial assets at FVTPL
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in statement of
comprehensive income.
AFS financial assets
Listed shares and similar securities held by the group and company that are traded in an active market are
classified as being AFS and are stated at fair value.