2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.10 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 according to the
basis set out in 2.11 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 2.33.
(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 for use in the Group’s
business and is capitalised if the product is technically 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 2.11. 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 viable, are written off.
243
KPJ Healthcare Berhad
Annual Report
2015
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONTINUED)
