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1PRINCIPAL ACCOUNTING POLICIES (continued)
Research and development (continued)
the Group intends to and has suffi cient
resources to complete development
and to use or sell the asset. The
expenditure capitalised includes
the cost of materials, direct labour
and overhead costs that are directly
attributable to preparing the asset for
its intended use. Other development
expenditure is recognised in profi t or
loss when incurred.
Capitalised development expenditure
is measured at cost less accumulated
amortisation and accumulated
impairment losses.
Goodwill
Goodwill arising on the acquisition of
subsidiaries, associates or joint ventures
represents the excess of the cost of an
acquisition over the fair value of the
Group’s interest in the net assets of the
acquired subsidiary, associate or joint
venture at the date of the acquisition
(refer to basis of consolidation). All
business combinations are accounted
for by applying the purchase method.
Goodwill arising from the acquisition
of a joint venture or an associated
company is included within the
carrying amount of the joint venture
or associated company. Goodwill
arising from a subsidiary is presented
separately in the statement of
fi nancial position and tested annually
for impairment and is stated at
cost less accumulated impairment
losses. Goodwill is allocated to
cash-generating units. On disposal
of a subsidiary, joint venture or
associated company, the attributable
amount of goodwill is included in the
determination of the profi t or loss on
disposal.
When an excess arising on an
acquisition is negative (negative
goodwill), it is recognised directly in
profi t or loss.
Subsequent costs
Subsequent expenditure on capitalised
intangible assets is capitalised only
when it increases the future economic
benefi ts embodied in the specifi c
asset to which it relates. All other
expenditure, including expenditure
on internally generated goodwill and
brands, is expensed as incurred.
Amortisation
Amortisation is based on cost and
calculated on the straight-line method at
rates considered appropriate to write
off carrying values over the estimated
useful lives of the intangible assets with
defi nite useful lives. Intangible assets
are amortised from the day they are
available for use.
The estimated lives of intangible assets
with defi nite useful lives are as follows:
• Investment in technology: 3 to 10
years
• Development expenditure and
intellectual property:1 to 3 years
Impairment
Financial assets
A fi nancial asset is assessed at each
reporting date to determine whether
there is any objective evidence that
it is impaired. A fi nancial asset is
considered to be impaired if objective
evidence indicates that one or more
events have had a negative effect on
the estimated future cash fl ows of that
asset.
An impairment loss in respect of a
fi nancial asset measured at amortised
cost is calculated as the difference
between its carrying amount, and the
present value of the estimated future
cash fl ows discounted at the original
effective interest rate. An impairment
loss in respect of an available-forsale
fi nancial asset is calculated by
reference to its current fair value.
Individually-signifi cant fi nancial
assets and those that have been
identifi ed as impaired are tested for
impairment on an individual basis.
The remaining fi nancial assets are
assessed collectively in groups that
share similar credit risk characteristics.
All impairment losses are recognised
in profi t or loss. Any cumulative loss in
respect of an available-for-sale fi nancial
asset recognised previously in other
comprehensive income is transferred to
profi t or loss.
An impairment loss is reversed if the
reversal can be related objectively
131 ANNUAL FINANCIAL STATEMENTS