Uster Technologies Ltd | Annual Report 2009 Uster Technologies ...

3.4 Intangible AssetsBusiness Combinations and GoodwillBusiness combinations are accounted for using the purchase method. This involves recognizing identifiableassets (including previously unrecognized intangible assets) and liabilities (including contingent liabilitiesand excluding future restructuring) of the acquired business at fair value.Goodwill represents the excess of the cost of the business combination over the Group’s interest in the netfair value of the identifiable assets, liabilities and contingent liabilities at the date of the acquisition. Whenthe excess is negative (negative goodwill), it is recognized immediately in profit or loss. Goodwill acquiredin a business combination is initially measured at cost.Following initial recognition goodwill is measured at cost less any accumulated impairment losses. For thepurpose of impairment testing goodwill is allocated from the date of acquisition to cash-generating units.The allocation is made to those cash-generating units or groups of cash-generating units that are expectedto benefit from the business combination, irrespective of whether other assets or liabilities of the Group areassigned to those units. Each unit to which the goodwill is allocated represents the lowest level within theUster Group at which the goodwill is monitored for internal management purposes. Impairment losses ongoodwill are not reversed.Research and DevelopmentResearch costs are expensed as incurred. An intangible asset arising from development expenditure on anindividual project is recognized only when the Group can demonstrate the technical feasibility of completingthe intangible asset so that it will be available for use or sale, its intention to complete and its ability touse or sell the asset, how the asset will generate future economic benefits, the availability of resources tocomplete the asset and the ability to measure reliably the expenditure during the development. Currentlythe Group did not capitalize development cost.Other Intangible AssetsIntangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assetsacquired in a business combination is the fair value at the date of acquisition. Following initial recognitionintangible assets are carried at cost less any accumulated amortization and any accumulated impairmentlosses.The useful lives of intangible assets are assessed to be either finite or indefinite.Intangible assets with finite lives are amortized using the straight-line method over their useful economiclife and assessed for impairment whenever there is an indication that the intangible asset may be impaired.The amortization period and the amortization method for an intangible asset with a finite useful life arereviewed at least once, usually at the end of, each financial year. Changes in the expected useful life or theexpected pattern of consumption of future economic benefits embodied in the asset are accounted for bychanging the amortization period or method and treated as changes in accounting estimates. The amortizationexpense on intangible assets with finite lives is recognized in the Statement of Comprehensive Income.Intangible assets with an indefinite useful life are tested annually for impairment either individually or atthe level of the cash-generating unit. Such intangibles are not amortized. The useful life of an intangibleasset with an indefinite life is reviewed annually to determine whether indefinite life assessment continuesto be supportable. If not, the change in the useful life assessment from indefinite to definite is made on aprospective basis.62 Uster Group – Notes to the Consolidated Financial Statements 2009