AFRICAN DAWN ANNUAL REPORT 2018 42 Accounting Policies continued Subsequently these intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows: Item Average useful life Micro finance software 5 years Intangible assets recognised on Knife Capital Group Period of contract between 3 - 6 years YueDiligence software development 3 years SME Snapshot software development Not yet brought into use The amortisation method, residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. 1.11 Impairment testing of goodwill, intangible assets, subsidiaries and property, plant and equipment The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Intangible assets that are not ready for use are tested annually for impairment and when an indicator for impairment exists. Intangible assets that are subject to amortisation and other non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher amount of an asset’s fair value less cost of disposal and value in use. Fair value less cost of disposal is determined by ascertaining the current market value of an asset and deducting any costs related to the realisation of the asset. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing impairment, assets that cannot be tested individually are Grouped at the lowest levels for which there are separately identifiable cash inflows from continuing use (cash-generating units). Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other non-financial assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed through profit or loss only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 1.12 Contingent assets A Contingent asset is an asset that arises from past events and whose existence will be confirmed only by the occurrence or non - occurrence of one or more uncertain future events not wholly within control of the entity. 1.13 Revenue Revenue comprises: • Interest income on principal outstanding debt and originating fees • Non-interest income (monthly service fees); • Income from the rendering of services; • Rental income (rental income from properties in possession); and • Insurance income Revenue excludes value-added tax. Revenue is measured at the fair value of consideration received or receivable, excluding sales taxes, and reduced by any rebates and trade discounts allowed.
AFRICAN DAWN 2018 Annual Report
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