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B.7
INTANGIBLE ASSETS
Intangible assets are non-monetary assets which are
separately identifiable, have no physical nature, are under the
company’s control and are able to generate future economic
benefits. Such assets are recognised at acquisition cost and/
or production cost, including all costs directly attributable
to make the assets available for use, net of accumulated
amortisation and impairment, if any. Borrowing costs directly
attributable to the acquisition or development of qualifying
assets are capitalised and amortised over the useful life of the
asset to which they refer. Amortisation commences when the
asset is available for use and is calculated on a straight-line
basis over the asset’s estimated useful life.
(a) Goodwill
Goodwill represents the difference between the cost
incurred for acquiring a controlling interest (in a business)
and the fair value of the assets and liabilities identified
at the acquisition date. Goodwill is not amortised, but
is tested for impairment at least annually. This test is
carried out with reference to the cash-generating unit
(“CGU”) or group of CGUs to which goodwill is allocated.
Reductions in the value of goodwill are recognised if the
recoverable amount of goodwill is less than its carrying
amount. Recoverable amount is defined as the higher of
the fair value of the CGU or group of CGUs, less costs to
sell, and the related value in use (see Section B.8 for more
details on how value in use is calculated). An impairment
loss recognised against goodwill cannot be reversed in a
subsequent period.
If an impairment loss identified by the test is higher than
the value of goodwill allocated to that CGU or group of
CGUs, the residual difference is allocated to the assets
included in the CGU or group of CGUs in proportion to their
carrying amount.
Such allocation shall not reduce the carrying amount of an
asset below the highest of:
• its fair value, less costs to sell;
• its value in use, as defined above;
• zero.
(b) Patents, concessions, licences, trademarks and similar
rights
These assets are amortised on a straight-line basis over
their useful lives.
(c) Computer software
Software licence costs are capitalised on the basis of
purchase costs and costs to make the software ready for
use. These costs are amortised on a straight-line basis
over the useful life of the software. Costs relating to the
development of software programs are capitalised, in
accordance with IAS 38, when it is likely that the asset’s
use will generate future economic benefits and if the
conditions described for “Research and development
costs” are met.
(d) Research and development costs
Research and development costs are charged to the
income statement when they are incurred, except for
development costs which are recorded as intangible assets
when the following conditions are met:
• the project is clearly identified and the related costs can be
reliably identified and measured;
• the technical feasibility of the project can be
demonstrated;
• the intention to complete the project and to sell its output
can be demonstrated;
• there is a potential market for the output of the intangible
asset or, if the intangible asset is to be used internally, its
usefulness can be demonstrated;
• there are sufficient technical and financial resources to
complete the project.
Development costs capitalised as intangible assets start to
be amortised once the output of the project is marketable.
