Annual Report 2006 - Venture Corporation Limited

notes to financial statements
December 31, 2006
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
The group’s policy for goodwill arising on the acquisition of associates is described under “Associates”.
i) INTANGIBLE ASSETS
Internally generated intangible assets – Research and development expenditure
Expenditure on research activites is recognised as an expense in the period in which it is incurred. Costs incurred
on development projects are recognised as intangible assets only if all the following have been demonstrated:
* the technical feasibility of completing the intangible asset so that it will be available for use or sale;
* the intention to complete the intangible asset and use or sell it;
* the ability to use or sell the intangible asset;
* how the intangible asset will generate probable future economic benefits;
* the availability of adequate technical, financial and other resources to complete the development and to
use or sell the intangible asset; and
* the ability to measure reliably the expenditure attributable to the intangible asset during its
development.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets the recognition criteria listed above. Where no internally
generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period
in which it is incurred. The group has capitalised development costs as intangible assets and these are amortised
using the straight line method over its useful life, which normally does not exceed 3 years.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses.
Intangible assets acquired in a business combination
Customer relationships acquired in a business combination are identified and recognised separately from
goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably.
The cost of such intangible assets is their fair value at the acquisition date and subsequent to initial recognition,
customer relationships acquired in a business combination are reported at cost less accumulated amortisation
and accumulated impairment losses. Customer relationships are amortised on a straight-line basis over their
remaining useful lives of 10 years.
j) IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL - At each balance sheet date,
the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is
any indication that these 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). Where it is not
possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
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