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FINANCIAL STATEMENTS AND NOTES 2007NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 20071.7 Research and development costsExpenditure on research activities is recognised as an expense in the period in which it is incurred.An internally generated intangible asset arising from the Group’s research and development is recognised only if all of the following conditions aremet:• The development cost of the asset can be measured reliably;• It is technically feasible to complete the intangible asset so that it will be available for use or sale;• The ability to use or sell the intangible asset; and,• It is the intention to complete the intangible asset so that it will be available for use or sale.Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it isincurred. Internally generated intangible assets are amortised on a straight-line basis over their useful lives.1.8 Impairmentof, then the recoverable amount is estimated and an impairment loss is recognised. Where it is not possible to estimate the recoverable amount foran individual asset, the recoverable amount is determined for the cash-generating unit to which the asset belongs.whether there is any indication that the assets may be impaired.The recoverable amount is the higher of fair value less costs to sell and value in use. Value in use represents the present value of the future cashWhere an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate ofits recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined hadno impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as incomeimmediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluationincrease. Impairment losses for goodwill are not reversed in subsequent periods.1.9 Leasesof the leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.Capitalised leased assets are depreciated to their estimated residual values over their estimated useful lives. Finance lease payments are allocatedthe liability to the lessor.line basis over the term of the lease.1.10 Property, plant and equipmentProperties comprise general purpose land and buildings held by the Group for its own use and investment property and buildings for purposesof generating rental income or held for capital appreciation. Properties are initially valued at historical cost and subsequently revalued every twoappropriate.The cost of property, plant and equipment includes all directly attributable expenditure incurred in the acquisition, establishment and installation of67annual report 2007