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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
109
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
1.
SIGNIFICANT ACCOUNTING POLICIES continued
Intangible assets continued
(c)
Franchise fees
Franchise fees are shown at historical cost. Franchise fees have a finite useful life and are subsequently
carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line
method to allocate the cost of franchise fees over their estimated useful lives (20 years).
Franchise fees are initially shown at fair value as determined in accordance with IFRS 3 –
Business
Combinations,
and are subsequently carried at the initially determined fair value less accumulated
amortisation and impairment losses.
(d)
Databases, customer listings, distribution agreements and customer relationships
Databases, customer listings, distribution agreements and customer relationships acquired through
business combinations are initially shown at fair value as determined in accordance with IFRS 3 –
Business Combinations,
and are subsequently carried at the initially determined fair value less
accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line
method to allocate the value of these assets over their estimated useful lives (three to 10 years).
Distribution agreements purchased are initially shown at cost, and are subsequently carried at the
initial cost less accumulated amortisation and impairment losses. Amortisation is calculated using the
straight-line method to allocate the value of these assets over their estimated useful lives (10 years).
(e)
Research and development
Costs incurred on development projects are recognised as intangible assets when the following criteria
are fulfilled:
•
•
It is technically feasible to complete the intangible asset and that it will be available for use or sale;
•
•
Management intends to complete the intangible asset and use or sell it;
•
•
There is an ability to use or sell the intangible asset;
•
•
It can be demonstrated how the intangible asset will generate probable future economic benefits;
•
•
Adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset are available; and
•
•
The expenditure attributable to the intangible asset during its development can be reliably
measured.
Research expenditure is recognised as an expense as incurred. 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. Capitalised development costs are recorded as intangible assets and amortised from the point
at which the asset is available for use (i.e. when it is in the location and condition necessary for it to be
capable of operating in the manner intended by management) on a straight-line basis over its useful
life (five to 10 years). Direct costs include the product development employee costs and an appropriate
portion of relevant overheads. Costs associated with the maintenance of existing products are
expensed as incurred.