2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.9 Intangible assets (continued)
(b) Other intangible assets (continued)
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.
2.10 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of
the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the
purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is
written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are
allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to
reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation
was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive
income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed
only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable
amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had
no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is
measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on
goodwill is not reversed in a subsequent period.
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Notes to the
Financial Statements
For the financial year ended 31 December 2014 (continued)
KPJ Healthcare Berhad annual report
2014
