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NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2013
79 INDOFOOD AGRI RESOURCES LTD • ANNUAL REPORT 2013
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.10 Intangible assets
(a) Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated
to the Group's cash-generating units that are expected to benefit from the synergies of the combination, irrespective of
whether other assets or liabilities of the acquire are assigned to those units.
The cash-generating units to which goodwill have been allocated is tested for impairment annually and whenever there
is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the
recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where
the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised
in the consolidated statement of comprehensive income. Impairment losses recognised for goodwill are not reversed in
subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed
of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based
on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.
Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2005 are treated
as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and
translated in accordance with the accounting policy set out in Note 2.6.
Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2005 are deemed
to be assets and liabilities of the Company and are recorded in Rupiah at the rates prevailing at the date of acquisition.
(b) Other intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in
a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible
assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and
assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation
period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life
or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing
the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is recognised in the consolidated statement of comprehensive income in the
expense category consistent with the function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually or more frequently if the events or changes
in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level.
Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to
determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite
to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the consolidated statement of comprehensive
income when the asset is derecognised.