EDC PR 2016 (FS section)

Construction in progress represents structures under construction and is stated at cost less any
impairment in value. This includes costs of construction and other direct costs. Costs also include
interest on borrowed funds and amortization of deferred financing costs on these borrowed funds
incurred during the construction period. Construction in progress is not depreciated until such
time that the assets are put into operational use.
Liquidated damages received arising from breach of contract are deducted from the cost of the
asset unless these can be directly linked to the amount of lost revenue. Liquidated damages are
recognized only when receipt is virtually certain.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less accumulated amortization and accumulated
impairment loss, if any. Internally-generated intangible assets, if any, excluding capitalized
development costs, are not capitalized and expenditure is reflected in the profit or loss in which
the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets
with finite lives are amortized over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortization period
and amortization method for an intangible asset with a finite useful life is reviewed at least at each
financial year end. Changes in the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset is accounted for by changing the amortization
period or method, as appropriate, and treated as changes in accounting estimates. The
amortization expense on intangible assets with finite lives is recognized in profit or loss in the
expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment
annually, either individually or at the cash-generating unit level. The assessment of indefinite life
is reviewed annually to determine whether the indefinite life continues to be supportable. If not,
the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference
between the net disposal proceeds, if any, and the carrying amount of the asset, and are recognized
in the profit or loss when the asset is derecognized.
Water Rights
The cost of water rights of FG Hydro is measured on initial recognition at cost.
Following initial recognition of the water rights, the cost model is applied requiring the asset to be
carried at cost less any accumulated amortization and accumulated impairment losses, if any.
Water rights are amortized using the straight-line method over 25 years, which is the term of the
agreement with the National Irrigation Administration (NIA).
Computer Software and Licenses
The costs of acquisition of computer software and licenses are capitalized as intangible asset if
such costs are not integral part of the related hardware.
These intangible assets are initially measured at cost. Subsequently, these are measured at cost
less accumulated amortization and allowance for impairment losses, if any. Amortization of
computer software is computed using the straight-line method over five (5) years.
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I Energy Development Corporation Performance Report 2016