The carrying amount of intangible assets with finite useful lives is reviewed at each reporting date by determining whether there is an
indication that the carrying value may be impaired. If any such indication exists, the item is tested for impairment by comparing the
recoverable amount of the asset or the CGU it is included within to the carrying value. Where the recoverable amount is determined by
the value in use, the projected net cash flows are discounted using a pre-tax discount rate. For assets with indefinite useful lives, the
recoverability of the carrying value of the assets is reviewed for impairment at each reporting date, or more frequently if events or
changes in circumstances indicate that it might be impaired. An impairment charge is recognised when the carrying value exceeds the
calculated recoverable amount. Impairment charges are recognised in profit or loss and may be reversed where there has been a
change in the estimates used to determine the recoverable amount.
II. Software development expenditure
Software development expenditure that meets the criteria for recognition as an intangible asset is capitalised on the balance sheet
and amortised over its expected useful life, subject to impairment testing. Costs incurred in researching and evaluating a project up to
the point of formal commitment to a project are treated as research costs and are expensed as incurred.
The capitalised costs are amortised on a straight line basis over the period following completion of a project or implementation of part
of a project. The recoverability of the carrying amount of the asset is assessed in the same manner as for acquired intangible assets
with finite useful lives.
W. GOODWILL
Goodwill is initially measured as the excess of the purchase consideration over the fair value of the net identifiable assets and
liabilities acquired and subsequently presented net of any impairment charges. Goodwill arising on acquisitions prior to 1 July 2004
has been carried forward on the basis of its deemed cost being the net carrying amount as at that date.
For the purpose of impairment testing, goodwill is allocated to CGUs. The carrying value of goodwill is tested for impairment at each
reporting date. Where the carrying value exceeds the recoverable amount, an impairment charge is recognised in profit or loss and
cannot subsequently be reversed. The recoverable amount of goodwill is determined by the present value of the estimated future cash
flows by using a pre-tax discount rate that reflects current market assessment of the risks specific to the CGUs.
At the date of disposal of a business, attributed goodwill is used to calculate the gain or loss on disposal.
X. TRADE AND OTHER PAYABLES
Trade and other payables are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services
received. The amounts are discounted where the effect of the time value of money is material.
Y. RESTRUCTURING PROVISION
A restructuring provision is recognised for the expected costs associated with restructuring where there is a detailed formal plan for
restructure and a valid expectation has been raised in those persons expected to be affected. The provision is based on the direct
expenditure to be incurred which is both directly and necessarily caused by the restructuring, including termination benefits,
decommissioning of information technology systems and exiting surplus premises and does not include costs associated with ongoing
activities. The adequacy of the provision is reviewed regularly and adjusted if required. Revisions in the estimated amount of a
restructuring provision are reported in the period in which the revision in the estimate occurs. The provision is discounted using a pre-
tax discount rate where the effect of the time value of money is material. Where discounting is applied, the increase in the provision
due to the passage of time is recognised as a finance cost.
Z. LEASE PROVISION
Certain operating leases for property require that the land and/or building be returned to the lessor in its original condition, however,
the related operating lease payments do not include an element for the cost this will involve. The present value of the estimated future
cost for the plant and equipment to be removed and the premises to be returned to the lessor in its original condition are recognised
as a lease provision when the relevant alterations are made to the premises. The costs are capitalised as part of the cost of property
and equipment and then depreciated over the useful lives of the assets (refer to section T of the summary of significant accounting
policies note).
AA. EMPLOYEE BENEFITS
I. Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries (including bonuses), annual leave and sick leave are recognised at the nominal amounts unpaid at
the reporting date using remuneration rates that are expected to be paid when these liabilities are settled, including on-costs. A
liability for sick leave is considered to exist only when it is probable that sick leave taken in the future will be greater than entitlements
that will accrue in the future.
II. Long service leave
A liability for long service leave is recognised as the present value of estimated future cash outflows to be made in respect of services
provided by employees up to the reporting date. The estimated future cash outflows are discounted using corporate bond yields
(2014-risk free interest rates) which have terms to maturity that match, as closely as possible, the estimated future cash outflows.
Factors which affect the estimated future cash outflows such as expected future salary increases, experience of employee departures
and period of service, are incorporated in the measurement.
III. Share based incentive arrangements
Share based remuneration is provided in different forms to eligible employees and IAG Directors. All of the arrangements are equity
settled share based payments.
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