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Notes to the financial statements
31 December 2012
(continued)
Annual Report 2012 KPJ Healthcare Berhad
2. Summary of significant accounting policies (continued)
2.8 Investment properties (continued)
A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group
holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is
carried at fair value.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use
and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in
profit or loss in the year of retirement or disposal.
2.9 Intangible assets
(a) Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that
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 whenever there is an indication that the
cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the
recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an
impairment loss is recognised in the 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 unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion
of the cash-generating unit retained.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations
and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.6.
(b) Other intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination
is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation
and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with
finite lives are amortised on a straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite
useful life are reviewed at least at each financial year-end.
Software development expenditure
Software development is stated at cost less accumulated amortisation and impairment losses. The expenditure represents development work
carried out in developing specialised software packages and is capitalised if the product is technically and commercially feasible and the Group
has sufficient resources to complete the development. It is amortised over the straight-line basis over a period of five years. The policy for the
recognition and measurement of impairment losses is in accordance with Note 2.10. The expenditure capitalised includes cost to purchase the
software and direct cost such as salaries and hardware costs specifically attributable to each project. Cost incurred in software development which
have ceased to be technically and commercially viable, are written off immediately.