Peachtree 2015 Annual Report Download - page 128
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The Sage Group plc | Annual Report & Accounts 2015
126
Operating assets and liabilities
6 Intangible assets
This note provides details of the non-physical assets used by the Group to generate revenues and profits. These assets include items
such as goodwill, and other intangible assets such as brands, customer relationships, computer software, in-process R&D and
technology which have predominantly been acquired as part of business combinations. These assets are initially measured at fair value,
meaning the best estimate of the value for which these assets could be sold in an arm’s length transaction.
Goodwill represents the excess between the amount paid to acquire the businesses over the fair value of the net assets at the
acquisition date.
This section also explains the accounting policies applied and the specific judgements and estimates made by the directors in arriving
at the carrying value of these assets.
6.1 Goodwill
Accounting policy
Goodwill arising from the acquisition of a subsidiary represents the excess of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value
of the Group’s total identifiable net assets acquired. Goodwill is carried at cost less accumulated impairment losses.
Goodwill previously written-off directly to reserves under UK GAAP prior to 1 October 1998 has not been reinstated and is not recycled to
the income statement on the disposal of the business to which it relates. Gains and losses on disposal of the entity include the carrying
amount of the foreign exchange on the goodwill relating to the entity sold (except for goodwill taken to reserves prior to the transition
to IFRS on 1 October 2004).
Goodwill is allocated to CGUs for the purpose of impairment testing. The recoverable amount of the CGU to which the goodwill relates
is tested annually for impairment or when events or changes in circumstances indicate that it might be impaired.
Goodwill is allocated to CGUs expected to benefit from the synergies of the combination and the allocation represents the lowest level
at which goodwill is monitored.
2015
£m
2014
£m
Cost at 1 October 1,476.7 1,516.6
– Additions 61.9 7.6
– Exchange movement (12.2) (47.5)
At 30 September 1,526.4 1,476.7
Impairment at 1 October 43.7 1.4
– Impairment in the year 62.3 44.3
– Exchange movement (25.6) (2.0)
At 30 September 80.4 43.7
Net book amount at 30 September 1,446.0 1,433.0
In the current year the Group acquired Paychoice and recorded goodwill of £59.6m (note 15.1). The Group also incurred a fair value
adjustment of £2.3m in relation to the acquisition of Exact which was acquired on 15 September 2014.