Notes to and forming part of the consolidated financial
statements for the year ended 30 June 2010
Note 1. Summary of significant accounting
policies (continued)
The asset’s residual values and useful lives are reviewed, and adjusted if
appropriate, at each statement of financial position date.
An assets’ carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount – (refer Note 1(i)).
Gains and losses on disposals are determined by comparing proceeds
with carrying amount. These are included in the statement of
comprehensive income.
Capital work in progress
Expenditure on development activities or other knowledge to a plan or
design of the production of new or substantially improved products or
services before the start of commercial production or use, is capitalised if
the product or service is technically and commercially feasible and
adequate resources are available to complete development. The
expenditure capitalised comprises all directly attributable costs, including
costs of materials, services, direct labour, finance costs incurred and an
appropriate proportion of overheads. Such assets are included in capital
work in progress until completed at which time they are transferred into
plant and equipment and depreciated in accordance with the policies set
out above.
Capital work in progress includes only those costs directly attributable to
the development phase and are only recognised following completion of
technical feasibility and where the Group has an intention and ability to
use the asset. Other development expenditure is recognised in the
statement of comprehensive income as an expense as incurred.
Computer software
Costs incurred in developing products or systems and costs incurred in
acquiring software and licenses that will contribute to future period
financial benefits through revenue generation and/or cost reduction are
capitalised to software and systems. Costs capitalised include external
direct costs of materials and service, direct payroll and payroll related
costs of employees’ time spent on the project. Amortisation is calculated
on a straight line basis over periods generally ranging from three years
for application software to 10 years for licences and other items.
(s) L easehold improvements
The cost of improvements to or on leasehold properties is amortised over
the unexpired period of the lease, or the estimated useful life of the
improvements to the consolidated entity.
(t) I ntangible assets
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 at the date of acquisition. Goodwill on acquisition of
subsidiaries is included in intangible assets. Goodwill on acquisition of
associates is included in investments in associates. Goodwill acquired in
business combinations is not amortised. Instead, goodwill is tested for
impairment annually or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. An impairment loss is recognised for the
amount by which the asset’s carrying value exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units (CGU’s) for the purpose of
impairment testing. Each of those CGU’s represents the lowest level
within the Group at which goodwill is monitored for internal management
purposes.
Brand names, trademarks and licences
Brand names, trademarks and licences acquired as part of business
combinations have a finite useful life and are carried at cost less accumulated
amortisation and impairment losses. Amortisation is calculated using the
straight-line method to allocate the cost of brand names, trademarks and
licences over their estimated useful lives of 15-22 years.
Contract intangibles
Contract intangibles acquired as part of business combinations have a
finite useful life and are carried at cost less accumulated amortisation
and impairment losses. Amortisation is calculated using the straight-line
method to allocate the cost of contract intangibles over their estimated
useful lives of two-12 years.
Customer relationships
Customer relationships acquired as part of business combinations have a
finite useful life and are carried at cost less accumulated amortisation
and impairment losses. Amortisation is calculated using the straight-line
method to allocate the cost of customer relationships over their
estimated useful lives of six -22 years.
Supplier/contractor databases
Supplier/contractor databases acquired as part of business combinations
have a finite useful life and are carried at cost less accumulated
amortisation and impairment losses. Amortisation is calculated using the
straight-line method to allocate the cost of supplier/contractor databases
over their estimated useful lives of 15-22 years.
Vendor network
Vendor networks acquired as part of business combinations have a finite
useful life and are carried at cost less accumulated amortisation and
impairment losses. Amortisation is calculated using the straight-line
method to allocate the cost of vendor networks over their estimated
useful lives of 15-22 years.
Acquired technology and software
Technology and developed software acquired in business combinations
have a finite useful life and are carried at cost less accumulated
amortisation and impairment losses. Amortisation is calculated using the
straight-line method to allocate the cost of developed software and
technology over their estimated useful lives of three-five years.
(u) Formation expenses and bid costs
Formation costs are capitalised when a new contract is won and are
amortised over the life of the contract. Bid costs are capitalised when the
Group has reached preferred bidder status and there is a reasonable
expectation that the cost will be recovered. Bid costs are recognised over
the shorter of three years and the life of the contract. Where a bid is
subsequently unsuccessful the previously capitalised costs are
immediately expensed.
(v) T rade and other payables
These amounts represent liabilities for goods and services provided to
the Group prior to the end of the financial period, which are unpaid. The
amounts are unsecured and are usually paid within 30-60 days of
recognition.
(w) S hort-term and long-term loans and borrowings
Loans and borrowings are initially recognised at fair value, net of
transaction costs incurred. Loans and borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in the
statement of comprehensive income over the period of the borrowings
using the effective interest rate method. Fees paid on the establishment
of loan facilities, which are not an incremental cost relating to the actual