notes to the financial statements - Singapore Technologies ...

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126 SIMPLY SMARTERNOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)3. Summary of significant accounting policies (continued)(e)Intangible assets(i)GoodwillGoodwill represents the excess of: over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairmentlosses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment,and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amountof the equity-accounted investee.(ii)Research and development expenditureResearch expenditure is recognised in profit or loss as and when incurred.Development expenditure on an individual project are recognised as an intangible asset when the Group can demonstrate the technicalfeasibility of completing the development so that it will be available for use or sale, its intention to complete and its ability to useor sell the asset, how the asset will generate future economic benefits, the availability of resources to complete and the ability tomeasure reliably the expenditure during the development. The expenditure capitalised includes the cost of materials, direct labour,overhead costs that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. In any othercircumstances, development costs are recognised in profit or loss as incurred.Development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.(iii)Film cost inventoryFilm cost inventory comprise film production costs which are recognised as an intangible asset when the Group can demonstrate thetechnical feasibility of completing the film so that it will be available for use or sale, its intention to complete and its ability to use orsell the asset, how the asset will generate future economic benefits, the availability of resources to complete and the ability to measurereliably the expenditure during the film production. Other film production costs are recognised in profit or loss as incurred.Film cost inventory is measured at cost less accumulated amortisation and accumulated impairment losses.(iv)Other intangible assetsOther intangible assets that are acquired by the Group are measured on initial recognition at cost. The cost of intangible assets acquiredin a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at costless any accumulated amortisation and any accumulated impairment losses.
SINGAPORE TECHNOLOGIES ENGINEERING LTD Annual Report 2011127NOTES TO THE FINANCIAL STATEMENTS31 December 2011(Currency - Singapore dollars unless otherwise stated)3. Summary of significant accounting policies (continued)(e)Intangible assets (continued)(v)Subsequent expenditureSubsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which itrelates. All other expenditure, including expenditure on internally generated intangible assets, is recognised in profit or loss as incurred.(vi)AmortisationAmortisation is calculated based on the cost of the asset less its residual value.Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other thangoodwill and film cost inventory, from the date that they are available for use.Film cost inventory is amortised using the individual-film-forecast computation method which amortises the film costs in the sameratio that current gross revenue bear to anticipated total gross income for the film. Amortisation commences when each film beginsto earn revenue.The estimated useful lives for the current and comparative periods are as follows:Dealer network – 7 yearsDevelopment expenditure – 5 yearsCommercial and intellectual property rights – 2 to 16 yearsBrands – 20 to 70 yearsFilm cost inventory – 20 yearsThe useful lives and amortisation methods are reviewed at the end of each financial year-end to ensure that the amount, methodand period of amortisation are consistent with previous estimates and the expected pattern of consumption of the future economicbenefits embodied in the intangible assets. Changes in the expected useful life or the expected pattern of consumption of futureeconomic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treatedas changes in accounting estimates. The amortisation expense is recognised in the expense category consistent with the functionof the intangible asset.(f)Investment propertyInvestment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary courseof business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost, netof depreciation and any impairment loss. Cost includes expenditure that is directly attributable to the acquisition of the investment property. Thecost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing theinvestment property to a working condition for their intended use and capitalised borrowing costs. Depreciation is recognised in profit or loss ona straight-line basis so as to write-off the cost of the investment property over its estimated useful life of 15 years.Investment property is derecognised when either it has been disposed of or when the investment property is permanently withdrawn fromuse and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property arerecognised in profit or loss in the year of retirement or disposal.
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