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NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2013
2.
Summary of significant accounting policies (cont’d)
2.7
Intangible assets (cont’d)
Computer software
Acquired software licences are stated at cost less accumulated amortisation and accumulated impairment in value,
if any. These costs are amortised using the straight-line method over their estimated useful lives of 6 years.
Software development costs
Software development costs are expensed as incurred. An intangible asset arising from development expenditure
on an individual project is recognised only when the Group can demonstrate the technical feasibility of completing
the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell
the asset, how the asset will generate future economic benefits, the availability of resources to complete and the
ability to measure reliably the expenditure during the development.
The carrying value of software development costs are reviewed for impairment annually when the asset is not yet
in use or more frequently when an indication of impairment arises during the reporting year. Upon completion, the
software development costs are amortised over the estimated useful life of 1 to 9 years.
2.8
Impairment of non-financial assets
The Group assesses at each reporting date whether there is 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 or cash-generating unit’s fair value less costs to sell and
its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or
cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. 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. In determining fair value less costs to sell, recent market
transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation
model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared
separately for each of the Group’s cash-generating units to which the individual assets are allocated. These budgets
and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate
is calculated and applied to project future cash flows after the fifth year.
Impairment losses are recognised in the 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. If such indication exists, the recoverable amount
is estimated. 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 the profit or loss unless the asset is measured at revalued amount, in which case the
reversal is treated as a revaluation increase.
Overseas Education Limited AR 2013
INVESTING IN EDUCATION
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