Peachtree 2013 Annual Report Download - page 105

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Group accounting policies continued
Critical accounting estimates and judgements
The Sage Group plc | Annual Report & Accounts 2013 99
Financial statements
Critical accounting estimates and judgements
The n of financial statements requires the use of accounting
estimates and assumptions by management. It also requires
management to exercise its judgement in the process of applying
the accounting policies. We continually evaluate our estimates,
assumptions and judgements based on available information.
The areas involving a higher degree of judgement or complexity
are described below.
Revenue recognition
The key area of judgement in respect of recognising revenue is the
timing of recognition, specifically in relation to recognition and deferral
of revenue on support contracts where management assumptions
and estimates are necessary.
Goodwill impairment
The judgements in relation to goodwill impairment testing relate to the
assumptions applied in calculating the value in use of the operating
companies being tested for impairment. The key assumptions applied
in the calculation relates to the future performance expectations of
the business. The carrying value of goodwill and the key assumptions
used in performing the annual impairment assessment are disclosed
in note 5.
Disposals
The calculation of the loss on disposal of businesses is an area of
complexity where management applies judgement. Goodwill allocated
to the disposals was equal to the goodwill created on original
acquisition, reflecting benefits associated with the original acquisitions
no longer remaining within the Group.
In addition to the loss on disposal noted above, one-off revenue and
cost items in relation to these disposals have been recognised as
exceptional in the financial statements.
The financial performance of the businesses disposed of have not been
treated as discontinued operations in the period as the products being
sold do not represent major lines of business or geographical areas.
Archer Capital litigation
The claim for damages made by Archer Capital in relation to the
potential purchase of MYOB is strongly rejected by management.
On that basis, and with supporting expert legal advice, management
do not consider there to be a present obligation and the possibility
of an outflow of resources is remote. As such, no provision or
contingent liability has been recognised in these financial statements.
103The Sage Group plc | Annual Report & Accounts 2013
GovernanceStrategic report Financial statements