Accounting Policies continued 1.11 Property, plant and equipment AFRICAN DAWN 47 ANNUAL REPORT 2015 Property, plant and equipment Property, plant and equipment is carried at historical cost less accumulated depreciation and any accumulated impairment losses. Items of property, plant, and equipment are capitalised when it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. This recognition principle is applied to all property, plant, and equipment costs at the time they are incurred. These costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. All other repairs and maintenance expenses are recognised in profit or loss when they are incurred. Depreciation is recognised so as to write off the cost of assets over their estimated useful lives, to their residual values. The straight-line method is used and the estimated useful lives are as follows: Item Depreciation method Average useful life Furniture and fixtures Straight line 4 - 6 years IT equipment Straight line 3 - 5 years Leasehold improvements Straight line Length of leases Motor vehicles Straight line 5 years Office equipment Straight line 3 - 5 years Telephone equipment Straight line 5 years Leased assets are depreciated at the shorter of the useful life or the period of the lease. 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 1.13. Any gain or loss on disposals is determined by comparing the disposal proceeds with the carrying amount of the asset and is recognised in profit or loss. 1.12 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.
AFRICAN DAWN 2015 Annual Report
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