Full Version Guinness Anchor Berhad Annual Report 2007 - Gab

Notes to the Financial Statementsfor the year ended 30 June 20072. Significant accounting policies (cont’d)(f)Intangible assetsCosts that are directly associated with identifiable computer software and that will probably generate economic benefits exceeding costs beyond one year orcost savings to the Group, and are not integral to other fixed assets are recognised as intangible assets. These costs include the software development employeecosts and an appropriate portion of relevant overheads. The computer software development costs are recognised as assets are amortised upon completion ofthe computer software on a straight line basis over its estimated useful life of 4 years.Costs associated with maintaining computer software programmes are recognised as an expense when incurred.(g)InventoriesInventories are valued at the lower of cost and net realisable value. Cost is arrived at on the following bases:Raw materials - specificWork-in-progress - averageFinished goods - averagePackaging materials - averageEngineering stores and spares - averageCost includes raw materials, duties where applicable, and other expenses in bringing the inventories into store. For finished goods and work-in-progress, costalso includes direct labour and an appropriate proportion of production overheads. In arriving at net realisable value, due allowance is made for obsolescence.(h)ReceivablesReceivables are initially recognised at their cost when the contractual right to receive cash or another financial asset from another entity is established.Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts.Receivables are not held for the purpose of trading.(i)Cash and cash equivalentsCash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changesin value.(j)Impairment of assetsThe carrying amounts of assets except for financial assets, inventories and deferred tax assets are reviewed at each reporting date to determine whether thereis any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.Annual Report 2007103Guinness Anchor Berhad (Company No. 5350-X)