Powering growth - Aztech Group Ltd - Investor Relations

56a z t e c h a n n u a l r e p o r t 2 0 0 9F i n a n c i a l S t a t e m e n t s2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)INTANGIBLE ASSETSInternally-generated intangible assets - research and development expenditureExpenditure on research activities is recognised as an expense in the period in which it is incurred.An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and onlyif, all of the following have been demonstrated:• the technical feasibility of completing the intangible asset so that it will be available for use or sale;• the intention to complete the intangible asset and use or sell it;• the ability to use or sell the intangible asset;• how the intangible asset will generate probable future economic benefits;• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;and• the ability to measure reliably the expenditure attributable to the intangible asset during its development.The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangibleasset first meets the recognition criteria listed above. Development costs that have been capitalised as intangible assets are amortised from thecommencement of the commercial production on a straight-line basis over the period of its expected benefits, which normally does not exceed3 years. Where no internally generated asset can be recognised, development expenditure is charged to profit or loss in the period in which it isincurred.Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulatedimpairment losses.IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL - At the end of each reporting period, the Group reviews thecarrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairmentloss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (ifany). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cashgeneratingunit to which the asset belongs.Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever thereis an indication that the asset may be impaired.Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset.If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset(cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate ofits recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediatelyin profit or loss.