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Notes to the Consolidated Financial Statements
30 June 2013
42 BRADKEN LIMITED ANNUAL REPORT 2013
Notes to the consolidated financial statements
30 June 2013
(continued)
1 Summary of significant accounting policies (continued)
(o) Property, plant and equipment
Buildings
20 to 66 years
Plant and equipment
1 to 20 years
Patterns
1 to 40 years
(p) Intangible assets
(i)
Goodwill
(ii) Patents, trademarks and brand names
(iii) Customer relationships
(iv) Research and development
(q) Payables
All property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying
cash flow hedges of foreign currency purchases of property, plant and equipment.
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are
unpaid. The amounts are unsecured and are usually paid within 60 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised
initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from the business combination in which the
goodwill arose, identified according to operating segments (note 4).
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design
and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a
success considering its commercial and technical feasibility and its costs can be measured reliably. The expenditure
capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate
proportion of overheads. Other development expenditures that do not meet these criteria are recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for
use on a straight-line basis over its useful life, which varies from 3 to 10 years.
Patents are carried at fair value at acquisition and amortised on a straight line basis over the life of the patent. Trademarks are
carried at their fair value at acquisition less impairment losses and amortised over 5 years with amortisation calculated on a
straight line basis. Brand names are not amortised if they continue to be used and add value. Discontinued brand names are
amortised over a period of 10 years as they are phased out.
Goodwill is measured as described in note 1(h). Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal
of an entity include the carrying amount of goodwill relating to the entity sold.
Customer relationships acquired as part of a business acquisition are recognised separately from goodwill. The customer
relationships are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses.
Amortisation is calculated based on their estimated useful lives, which currently vary from 10 to 20 years.
Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is
calculated on a straight line basis so as to write off the net cost of each asset over its expected useful life. Assets are
depreciated or amortised from the date of acquisition, or in respect of internally constructed assets, from the time an asset is
completed and held ready for use. Depreciation is calculated using the straight line method to allocate their cost, net of their
residual values, over their estimated useful lives, as follows:
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are
incurred.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income
statement.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount (note 1(i)).
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Bradken Limited