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NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
110
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
1.
SIGNIFICANT ACCOUNTING POLICIES continued
Intangible assets continued
(f)
Purchased starter pack bases and postpaid bases
Purchased starter pack bases represent the right to earn future revenue from starter packs already
distributed and are initially recognised at the cost to the Group. Starter pack bases have a finite life
and are subsequently carried at cost less accumulated amortisation. Amortisation is calculated using
the straight-line method over their estimated useful lives (seven years).
Purchased postpaid bases represent the right to earn revenue from the cellular network in respect of
contracts forming part of the acquired base. Postpaid bases have a finite life and are subsequently
carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line
method over their estimated useful lives (10 years). Where the Group is entitled to a warranty refund
on the initial cost of a base, this is disclosed as a reduction in the cost of the asset.
(g)
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of
the net identifiable assets of the acquired subsidiary, associate or jointly controlled entity at the date of
acquisition. Goodwill is attributable to synergies that the Group expects to derive from the transaction.
If the cost of acquisition is less than the net assets of the subsidiary acquired, the difference is
recognised directly in the statement of comprehensive income. Goodwill on the acquisition of
subsidiaries is included in “goodwill” in the statement of financial position. Goodwill on acquisitions
of associates and joint ventures is included in “investments in and loans to associates and joint
ventures”.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Impairment is
determined by assessing the recoverable amount of the cash-generating unit to which the goodwill
relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount,
an impairment is recognised.
Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of
an entity include the carrying amount of goodwill relating to the entity sold.