Barclays 2011 Annual Report Download - page 244

Notes to the financial statements
For the year ended 31 December 2011 continued
26 Goodwill and intangible assets
Accounting for goodwill and other intangible assets
Goodwill
The carrying value of goodwill is determined in accordance with IFRS 3 Business Combinations and IAS 36 Impairment of Assets.
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures, and represents the excess of the fair value of the purchase
consideration over the fair value of the Group’s share of the assets acquired and the liabilities and contingent liabilities assumed on the date of the
acquisition.
Goodwill is reviewed annually for impairment, or more frequently when there are indications that impairment may have occurred. The test involves
comparing the carrying value of goodwill with the present value of the pre-tax cash flows, discounted at a rate of interest that reflects the inherent
risks, of the cash generating unit to which the goodwill relates, or the cash generating unit’s fair value if this is higher.
Intangible assets
The accounting standard that the Group applies in accounting for intangible assets other than goodwill is IAS 38 Intangible Assets.
Intangible assets include brands, customer lists, licences and other contracts, core deposit intangibles and mortgage servicing rights. They are
initially recognised when they are separable or arise from contractual or other legal rights, the cost can be measured reliably and, in the case of
intangible assets not acquired in a business combination, where it is probable that future economic benefits attributable to the assets will flow from
their use.
Intangible assets are reviewed for impairment when there are indications that impairment may have incurred.
They are stated at cost (which is, in the case of assets acquired in a business combination, the acquisition date fair value) less amortisation and
provisions for impairment, if any, and are amortised over their useful lives in a manner that reflects the pattern to which they contribute to future
cash flows, generally over 4-25 years.
Goodwill
£m
Internally
generated
software
£m
Other
software
£m
Core
deposit
intangibles
£m
Brands
£m
Customer
lists
£m
Mortgage
servicing
rights
£m
Licences
and other
£m
Total
£m
2011
Cost
As at 1 January 2011 7,259 1,091 234 347 202 1,686 – 473 11,292
Additions and disposals (210) 375 98 (1) – 144 – (19) 387
Exchange and other movements (352) (29) (4) (59) (36) (106) – (10) (596)
As at 31 December 2011 6,697 1,437 328 287 166 1,724 – 444 11,083
Accumulated amortisation and
impairment
As at 1 January 2011 (1,040) (552) (86) (121) (109) (493) – (194) (2,595)
Disposals 210 2 5 –––– 23 240
Amortisation charge – (157) (35) (13) (18) (158) – (38) (419)
Impairment charge (597) (4) ––––––(601)
Exchange and other movements 35 17 2 20 21 36 – 7 138
As at 31 December 2011 (1,392) (694) (114) (114) (106) (615) – (202) (3,237)
Net book value 5,305 743 214 173 60 1,109 – 242 7,846
2010
Cost
As at 1 January 2010 7,058 963 237 301 175 1,521 164 462 10,881
Additions and disposals 12 88 3 – – 28 (168) 22 (15)
Exchange and other movements 189 40 (6) 46 27 137 4 (11) 426
As at 31 December 2010 7,259 1,091 234 347 202 1,686 – 473 11,292
Accumulated amortisation and
impairment
As at 1 January 2010 (826) (465) (58) (82) (84) (318) (117) (136) (2,086)
Disposals – 100 – – – 2 144 11 257
Amortisation charge – (178) (36) (19) (18) (141) (7) (38) (437)
Impairment charge (243) (14) – (7) – (15) (19) (17) (315)
Exchange and other movements 29 5 8 (13) (7) (21) (1) (14) (14)
As at 31 December 2010 (1,040) (552) (86) (121) (109) (493) – (194) (2,595)
Net book value 6,219 539 148 226 93 1,193 – 279 8,697
242 Barclays PLC Annual Report 2011 www.barclays.com/annualreport