Intangible assets purchased in a separate transaction are initially measured at the purchase price, whereas the development costs, which meet the recognition criteria, are measured at their generation cost. The purchase price of intangible assets acquired in a business combination amounts to their fair value as at the combination date. After initial recognition, intangible assets are disclosed at their purchase price or generation cost less amortisation and impairment losses. Expenditure on intangible assets generated internally, except for capitalised expenditure on development works, are not capitalised and are recognised in the costs of the period in which they were incurred.
The Group determines whether the useful life of intangible assets is definite or indefinite. Intangible assets with definite useful lives are amortised for the useful life and tested for impairment each time the indicators implying their impairment occur. The period and the amortisation method for intangible assets with definite useful lives are verified at least at the end of each financial year. Changes in the assumed useful life or the assumed manner of consuming economic benefits generated from a given asset are recognised through a change of the period or amortisation method, respectively, effective from the beginning of the next financial year. The amortisation charge for intangible assets with definite useful lives is recognised in profit or loss under the ‘Depreciation/Amortisation’ item. Intangible assets with indefinite useful lives and intangible assets not put into use are tested for impairment at the end of each financial year and every six months, if indicators of impairment occur.
The costs of research works are recognised as costs at the moment of incurrence.
The Group capitalises costs of development works only if all of the following aspects can be evidenced:
Other development costs are recognised in the income statement upon their incurrence.
The development costs are recognised as intangible assets pursuant to the historical cost concept and are subject to amortisation charges and impairment losses.
Other intangible assets (including software) acquired by the Group are recognised at their purchase cost less amortisation and impairment losses. Expenditure made on goodwill generated internally or trademarks is recognised in profit or loss at its incurrence.
Subsequent expenditure on the components of the existing intangible assets is subject to capitalisation only when it is probable that the expected future economic benefits related to a given component will flow in. Other expenditure is recognised in the income statement at its incurrence.
Intangible assets are subject to amortisation on a straight-line basis taking into account their useful life unless it is indefinite. Intangible assets other than intangible assets with indefinite useful lives are amortised from the day they become available for use. The estimated useful life is as follows:
| Software | 5 – 10 years |
|---|---|
| Capitalised development costs | 5 – 10 years |
| Database of customers | 15 years |
Any gains or losses resulting from the derecognition of intangible assets from the balance sheet are measured based on the difference between the net proceeds from sales and the carrying amount of a given asset and are recognised in profit or loss at their derecognition from the balance sheet.
Goodwill from the acquisition of an entity is initially recognised at the amount of the surplus of the total of:
over the net amount determined as at the date of the acquisition of the amounts of the identifiable assets acquired and the liabilities assumed.
After the initial recognition, goodwill is recognised at the initial value less accumulated impairment losses. The impairment test is conducted once a year or more frequently, if any indicators of impairment occur. Goodwill is not subject to depreciation.
As of the date of the acquisition, the acquired goodwill is allocated to each of the cash-generating units which may take advantage of the merger synergy. Each unit or a group of units the goodwill has been allocated to:
The impairment loss is determined through the valuation of the recoverable amount of the cash-generating unit to which the respective goodwill has been allocated. If the recoverable amount of a cash-generating unit is lower than the carrying amount, impairment loss is recognised. If goodwill constitutes a part of a cash-generating unit and part of the business within that unit is sold, for the determination of gains or losses from the sale of such business, the goodwill related to the business sold is included in its carrying amount. In such circumstances, the goodwill sold is determined based on the relative value of the business sold and the value of the retained part of the cash-generating unit.
