AFRICAN DAWN ANNUAL REPORT 2017 38 Accounting Policies continued The depreciation method, residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. If the recoverable amount is less than the carrying amount then the carrying amount is impaired in line with policy 1.11. 1.10 Intangible assets Intangible assets acquired in a business combination - contracts with clients Contractual client relationships acquired in a business combination are recognised at fair value at the date of acquisition. The contractual client relationships have a finite useful life and are carried at cost less accumulated amortisation. The useful lives of these client relationships are reviewed on an annual basis. Amortisation is calculated using the straight-line method over the expected life of the client relationship. Computer software - internally generated Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the group are recognised as intangible assets when the criteria are met. Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Subsequently these intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows: Item Average useful life Micro finance software 5 years Intangible assets recognised on Knife Capital Group Period of contract between 3 - 6 years The amortisation method, residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. 1.11 Impairment testing of goodwill, intangible assets and subsidiaries and property, plant and equipment The carrying amounts of the group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that are not ready for use are tested annually for impairment and when an indicator for impairment exists. Intangible assets that are subject to amortisation and other non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher amount of an asset’s fair value less cost of disposal and value in use. Fair value less cost of disposal is determined by ascertaining the current market value of an asset and deducting any costs related to the realisation of the asset. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing impairment, assets that cannot be tested individually are grouped at the lowest levels for which there are separately identifiable cash inflows from continuing use (cash-generating units). Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis. An impairment loss in respect of goodwill is not reversed.
AFRICAN DAWN 2017
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