Broome Port Authority - Parliament of Western Australia

g) Intangible assets
(i)
Research and development
Research costs are expensed as incurred.
Development activities involve a plan or design for the production of new or substantially improved
products and processes. Development expenditure is capitalised only if development costs can be
measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable and the Authority intends to and has sufficient resources to complete
development and to use or sell the asset. The expenditure capitalised includes the cost of materials,
direct labour and overhead costs that are directly attributable to preparing the asset for its intended
use. Other development expenditure is recognised in profit or loss as incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and
accumulated impairment losses.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates.
(iii) Computer software
Software that is an integral part of the related hardware is treated as property, plant and equipment.
Software that is not an integral part of the related hardware is treated as an intangible asset.
(iv)
Amortisation
Amortisation is recognised in profit or loss on a straight line basis over the estimated useful lives of
intangible assets from the date they are available for use. Computer software amortisation is 2 to 20
years. The estimated useful life of amortised assets is as follows:
Computer software 2 to 20 years
h) Impairment
Property, plant and equipment and intangible assets are tested for any indication of impairment at
each balance sheet date. Where there is any indication of impairment, the recoverable amount is
estimated. Where the recoverable amount is less than the carrying amount, the asset is considered
impaired and is written down to the recoverable amount and an impairment loss is recognised. As
the Authority is a not for profit entity, the recoverable amount is the higher of an asset’s fair value
less costs to sell and depreciated replacem
ent cost.
The risk of impairment is generally limited to circumstances where an asset’s depreciation is
materially understated, where the replacement cos t is falling or where there is a significant change
in useful life. Each relevant class of assets is reviewed annually to verify that the accumulated
depreciation/amortisation reflects the level of consumption or expiration of the asset’s future
economic benefits and to any impairment risk from falling replacement costs.
Intangible assets not yet available for use are tested for impairment at each balance sheet date
irrespective of whether there is any indication of impairment.
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