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AFRICAN DAWN Annual Report 2016

Accounting Policies continued 1.11 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 following criteria are met: • it is technically feasible to complete the asset so that it will be available for use. • there is an intention to complete and use or sell it. • there is an ability to use or sell software product; • it can be demonstrated how the software product will generate probable future economic benefits; • adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and • the expenditure attributable to the software product during its development can be reliably measured. 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. 1.12 Impairment testing of goodwill, intangible assets, investments in associate 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, intangible assets that have an indefinite useful life 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. 42 AFRICAN DAWN ANNUAL REPORT 2016


AFRICAN DAWN Annual Report 2016
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