Creative 2013 Annual Report Download - page 25

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25
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
Please refer to the paragraph “Investments in subsidiaries and associated companies” for the accounting policy on investments
in associated companies in the separate nancial statements of the Company.
2.3 Intangible assets
(a) Goodwill on acquisitions
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identiable assets,
liabilities and contingent liabilities of the acquired subsidiaries and associated companies at the date of acquisition.
Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses.
Goodwill on associated companies is included in the carrying amount of the investments.
Gains and losses on the disposal of subsidiaries and associated companies include the carrying amount of goodwill relating
to the entity sold.
(b) Acquired trademarks and licenses
Trademarks and licenses acquired are initially recognised at cost and are subsequently carried at cost less accumulated
amortisation and accumulated impairment losses. These costs are amortised to prot or loss using the straight-line method
over the shorter of the contractual rights and estimated useful lives of the assets, ranging from one to ten years.
The amortisation period and amortisation method are reviewed at least at each balance sheet date. The effects of any revision
are recognised in prot or loss when the changes arise.
2.4 Impairmentofnon-nancialassets
(a) Goodwill
Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired. Goodwill
included in the carrying amount of an investment in an associated company is tested for impairment as part of the investment,
rather than separately.
For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units (“CGU”)
expected to benet from synergies arising from the business combination.
An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable
amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-
use.
The total impairment loss of a CGU is allocated rst to reduce the carrying amount of goodwill allocated to the CGU and
then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU.
An impairment loss on goodwill is recognised in prot or loss and is not reversed in a subsequent period.
(b) Intangible assets
Property and equipment
Investments in subsidiaries and associated companies
Intangible assets, property and equipment and investments in subsidiaries and associated companies are tested for impairment
whenever there is any objective evidence or indication that these assets may be impaired.
For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset basis unless the asset does not generate cash inows that are largely