notes to the financial statements - Sino

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 20083. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)3.27 Research and development costs (Continued)Direct costs include employee costs incurred on development along with an appropriate portion of relevantoverheads. The costs of internally generated developments are recognised as intangible assets. They aresubject to the same subsequent measurement method as externally acquired intangible assets.All other development costs are expensed as incurred.3.28 Discontinued operationsA discontinued operation is a component of the Group’s business, the operations and cash flows of whichcan be clearly distinguished from the rest of the Group and which represents a separate major line ofbusiness or geographical area of operations.Classification as a discontinued operation occurs upon disposal. It also occurs when the operation isabandoned.Where an operation is classified as discontinued, a single amount is presented on the face of profit and lossaccount, which comprises the post-tax profit or loss for the discontinued operation.3.29 Government grantsGrants from the government are recognised at their fair value where there is a reasonable assurance that thegrant will be received and the Group will comply with all attached conditions. Government grants relatingto costs are deferred and included in current liabilities as deferred government grants and recognised inthe income statement over the period necessary to match them with the costs that they are intended tocompensate and are presented separately from the costs.4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSEstimates and judgements are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.4.1 Critical accounting estimates and assumptionsThe Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,by definition, seldom equal the related actual results. The estimates and assumptions that have a significantrisk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financialyear are discussed below:Depreciation and amortisationThe Group depreciates and amortises the investment property,property, plant and equipment and intangibleassets other than goodwill on a straight line basis over the estimated useful life, and after taking intoaccount of their estimated residual value, using the straight-line method, at the rate 5% per annum, 5% to33- 1 / 3% per annum and 25% per annum, respectively, commencing from the date on which the assets areavailable for use. The estimated useful life and dates that the Group places the assets into productive usereflects the directors’ estimate of the periods that the Group intend to derive future economic benefits fromthe use of the Group’s investment property, property, plant and equipment and intangible assets.60 Sino-i Technology Limited Annual Report 2008