Experian 2013 Annual Report Download - page 108
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5. Significant accounting policies (continued)
Marketing-related acquisition intangibles:
•Trademarks and licences – over their contractual lives up to a maximum period of twenty years; and
•Trade names – over three to fourteen years based on management’s expectations to retain trade names within the business.
Other intangibles
Other intangibles are capitalised at cost. Certain costs incurred in the developmental phase of an internal project are capitalised provided that a
number of criteria are satisfied. These include the technical feasibility of completing the asset so that it is available for use or sale, the availability
of adequate resources to complete the development and to use or sell the asset, and how the asset will generate probable future economic
benefit.
The cost of such assets with finite useful economic or contractual lives is amortised on a straight line basis over those lives. The carrying values
are reviewed for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. If impaired,
the carrying values are written down to the higher of fair value less costs to sell, and value-in-use which is determined by reference to projected
future income streams using assumptions in respect of profitability and growth.
Further details on the capitalisation and amortisation policy for the key asset classifications within other intangibles are:
•Databases – capitalised databases, which comprise the data purchase and data capture costs of internally developed databases, are
amortised over three to seven years.
•Computer software (internal use software) – computer software licences purchased for internal use are capitalised on the basis of the costs
incurred to purchase and bring into use the specific software. These costs are amortised over three to ten years.
•Computer software (internally generated software) – costs that are directly associated with the production of identifiable and unique software
products controlled by the Group, and that will generate economic benefits beyond one year, are recognised as intangible assets. These costs
are amortised over three to ten years.
Research expenditure, together with other costs associated with developing or maintaining computer software programmes, is recognised in
the Group income statement as incurred.
(g) Property, plant and equipment (note 23)
Property, plant and equipment is held at cost less accumulated depreciation and any impairment in value. Cost includes the original purchase
price of the asset and amounts attributable to bringing the asset to its working condition for its intended use.
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance
leases. Such leases are capitalised at inception at the lower of the fair value of the leased asset and the present value of the minimum
lease payments.
Depreciation is provided at rates calculated to depreciate the cost, less estimated residual value based on prices prevailing at the balance sheet
date, of each asset evenly over its expected useful life as follows:
•Freehold properties – 50 years;
•Short leasehold properties – the remaining period of the lease;
•Finance leases – over the lower of the useful life of the equipment and period of the lease; and
•Other plant and equipment – three to ten years according to the estimated life of the asset. Technology based assets are typically depreciated
over three to five years with other infrastructure assets depreciated over five to ten years.
(h) Trade receivables (note 26)
Trade receivables are initially recognised at fair value and subsequently measured at this value less any provision for impairment. Where the
time value of money is material, receivables are then carried at amortised cost using the effective interest rate method, less any provision for
impairment.
A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according
to the original terms of receivables. Such evidence is based primarily on the pattern of cash received compared to the terms upon which the
receivable is contracted. The amount of the provision is the difference between the carrying amount and the value of estimated future cash
flows. Any charges or credits in respect of such provisions and irrecoverable trade receivables are recognised in the Group income statement
within other operating charges.
(i) Cash and cash equivalents (note 27)
Cash and cash equivalents include cash in hand, term and call deposits held with banks and other short-term highly liquid investments with
original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the Group balance sheet. For the
purposes of the Group cash flow statement, cash and cash equivalents are reported net of bank overdrafts.
Notes to the Group financial statements continued