Page 73 - Beeks Financial Cloud Group Annual Report 2021

Beeks Financial Cloud Group PLC
Notes to the Consolidated Financial Statements For the year ended 30 June 2021

liabilities assumed at the date project) is recognised as an expense life is deemed to be five years
of acquisition. Goodwill acquired in the period in which it is incurred. for all developments capitalised.
in business combinations is not Development costs incurred are Amortisation charges are
amortised. Instead, goodwill is tested capitalised when all the following recognised through cost of sales in
for impairment annually or more conditions are satisfied: the income statement in the period
frequently if events or changes in / completion of the intangible asset in which they are incurred.
circumstances indicate that it might is technically feasible so that it will
be impaired, and is carried at cost be available for use or sale; IMPAIRMENT
less accumulated impairment losses. / The Group intends to complete Goodwill and assets with an
Intangible assets carried forward the intangible asset and use or indefinite useful life are tested
from prior years are re-valued at the sell it; annually for impairment, or more
exchange rate in the current financial / The Group has the ability to use frequently if events or changes in
year. Impairment testing is carried or sell the intangible asset; circumstances indicate that they
out by assessing the recoverable / the intangible asset will generate might be impaired. Other non-
amount of the cash generating probable future economic benefits; financial assets are reviewed for
unit to which the goodwill relates. A / there are adequate technical, impairment whenever events or FINANCE
bargain purchase is immediately financial and other resources to changes in circumstances indicate
released to the Income Statement in complete the development and to that the carrying amount may not
the year of acquisition. use or sell the intangible be recoverable. An impairment loss
asset, and is recognised for the amount by
Customer relationships / the expenditure attributable which the asset’s carrying amount
Included within the value of to the intangible asset during its exceeds its recoverable amount.
intangible assets are customer development can be measured
relationships. These represent the reliably. Recoverable amount is the higher
purchase price of customer lists of an asset’s fair value less costs
and contractual relationships Development costs not meeting of disposal and value-in-use. The
purchased on the acquisition of the criteria for capitalisation are value-in-use is the present value
the business and assets of Gallant expensed as incurred. The costs of the estimated future cash flows
VPS Inc., and Commercial Network which do meet the criteria range relating to the asset using a pre-tax
Services. These relationships are from new product development discount rate specific to the asset
carried at cost less accumulated to the enhancement of existing or cash-generating unit to which
amortisation or impairment losses services such as mail platforms. the asset belongs. Assets that do
where applicable. Amortisation is The scope of the development not have independent cash flows
calculated using the straight line team’s work continues to evolve are grouped together to form a
method over periods of between as The Group continues to cash-generating unit.
five and ten years and is charged to deliver business critical solutions
cost of sales. to a growing customer base. EQUITY
Development costs capitalised Ordinary shares are classified as
Development costs are amortised on a straight-line equity. An equity instrument is
Expenditure on research (or the basis over the estimated useful life any contract that evidences a
research phase of an internal of the asset. The estimated useful residual interest in the assets of
71