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Notes to the Financial Statements
Washington H. Soul Pattinson and Company Limited
Annual Report 2016
110
Fixed Assets
27
NOTE 27
INTANGIBLE ASSETS
Accounting policy
– Intangible 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 acquisitions of
subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in the carrying
amount of investments in associates.
Goodwill is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or
changes in circumstances indicate that it maybe be impaired, and is carried at cost less accumulated impairment
losses. Goodwill acquired is allocated to cash generating units for the purpose of impairment testing. The
allocation is made to those cash generating units or group of cash generating units that are expected to benefit
from the business combination in which in which the goodwill arose. Cash generating units are discussed in the
impairment section below.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Water rights and mining information
The Group benefits from water rights associated with its mining operations through the efficient and cost effec-
tive operations of the mine. The value of exploration, pre-feasibility and feasibility costs necessary for regulatory,
reporting and internal control purposes have been recognised as a mining information intangible asset.
Software
Software is stated at historical cost less applicable amortisation. Historical cost includes expenditure that is
directly attributable to the acquisition of software. Amortisation is calculated so as to write off the cost of each
item of software during its expected economic life to the Group.
Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and
impairment losses.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
Amortisation of intangible assets
Amortisation is charged to the income statement on a straight line basis, unless otherwise stated, over the
estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite
useful life are systematically tested for impairment at each balance date.
Other intangible assets are amortised from the date they are available for use. The estimated useful lives of
intangibles are as follows:
Class of intangible
Useful life
Goodwill
Indefinite life
Water rights and mining information
Estimated life of mine
Software
3 – 5 years
Impairment
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment or more frequently if changes or circumstances indicate that they may be impaired.
Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. Refer to note 25 for details on impairment testing.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating units). Intangible assets other than goodwill that suffered impairment are reviewed for possible
reversal of the impairment at each reporting date. Goodwill impairments are not reversible.
Impairment losses for intangible assets are recognised in the income statement.