Annual Report 2010 - Leeden Limited

Notes to the Financial Statementsfor the Financial Year ended 31 December 2010Leeden Limited Annual Report 20102. Summary of significant accounting policies (cont’d)2.11 Intangible assets(a)GoodwillGoodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulatedimpairment losses.For the purpose of impairment testing, goodwill acquired is allocated to each of the Group’s cash-generating unitsthat are expected to benefit from the synergies of the combination.The cash-generating unit to which goodwill has been allocated is tested for impairment annually and wheneverthere is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cashgeneratingunit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where therecoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognisedin profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unitis disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of theoperation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstanceis measured based on the relative fair values of the operations disposed of and the portion of the cash-generatingunit retained.Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets andliabilities of the foreign operations and are recorded in the functional currency of the foreign operations andtranslated in accordance with the accounting policy set out in Note 2.6.(b)Other intangible assetsIntangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in abusiness combination is their fair values as at the date of acquisition. Following initial acquisition, intangible assetsare measured at cost less any accumulated amortisation and accumulated impairment losses.Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairmentwhenever there is an indication that the intangible assets may be impaired. The amortisation period and theamortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or theexpected pattern of consumption of future economic benefits embodied in the asset is accounted for by changingthe amortisation period or method, as appropriate, and are treated as changes in accounting estimates. Theamortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense categoryconsistent with the function of the intangible asset.Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or morefrequently if the events and circumstances indicate that the carrying value may be impaired either individually orat the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible assetwith an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to besupportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.Gains or losses arising from derecognition of an intangible asset are measured as the difference between the netdisposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset isderecognised.(i)Trade namesThe trade names were acquired in business combinations. The useful lives of the trade names are estimatedto be indefinite because based on the current market share of the brands, management believes there isno foreseeable limit to the period over which the brands are expected to generate net cash inflows for theGroup.53