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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
4. SIGNIFICANT ACCOUNTING POLICIES (continued)
4.7 Intangible assets (continued)
(a) Goodwill (continued)
After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is not amortised but instead tested for impairment annually or more frequently if events or
changes in circumstances indicate that the carrying amount could be impaired. Objective events
that would trigger a more frequent impairment review include adverse industry or economic
trends, significant restructuring actions, significantly lowered projections of profitability, or a
sustained decline in the acquiree’s market capitalisation. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to the entity sold.
(b) Other intangible assets
Other intangible assets are recognised only when the identifiability, control and future economic
benefit probability criteria are met.
The Group recognises at the acquisition date separately from goodwill, an intangible asset of
the acquiree, irrespective of whether the asset had been recognised by the acquiree before
the business combination. In-process research and development projects acquired in such
combinations are recognised as an asset even if subsequent expenditure is written off because
the criteria specified in the policy for research and development is not met.
Intangible assets are initially measured at cost. The cost of intangible assets recognised in a business
combination is their fair values as at the date of acquisition.
After 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 are assessed for any indication that the asset could be
impaired. If any such indication exists, the entity shall estimate the recoverable amount of the
asset. The amortisation period and the amortisation method for an intangible asset with a finite
useful life are reviewed at least at the end of each reporting period. The amortisation expense
on intangible assets with finite lives is recognised in profit or loss and is included within the other
operating expenses line item.
An intangible asset has an indefinite useful life when based on the analysis of all the relevant
factors, there is no foreseeable limit to the period over which the asset is expected to generate
net cash inflows to the Group. Intangible assets with indefinite useful lives are tested for impairment
annually and wherever there is an indication that the carrying amount may be impaired. Such
intangible assets are not amortised. Their useful lives are reviewed at the end of each reporting
period to determine whether events and circumstances continue to support the indefinite useful
life assessment for the asset. If they do not, the change in the useful life assessment from indefinite
to finite is accounted for as a change in accounting estimate in accordance with MFRS 108
Accounting Policies, Changes in Accounting Estimates and Errors
.
Expenditure on an intangible item that is initially recognised as an expense is not recognised as
part of the cost of an intangible asset at a later date.