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Annual Report & Accounts 2014 - NOTES
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A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. if the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods. on disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 1.6.2 other intangible Assets other intangible assets that are acquired by the group are stated at cost less accumulated amortisation (see 1.6.4) and impairment losses (see accounting policy 1.7). the cost of intangible assets acquired in a business combination is the fair value at acquisition date. the valuation methodology used for each type of identifiable asset category is detailed below: asset category Valuation methodology consulting and magazine income (cost saving) software licence income (incremental value plus loss of profits) trademarks Relief from royalty trade name Relief from royalty non contractual customer relationships excess earnings Where, in the opinion of the Directors, the group's expenditure in relation to development of internet activities results in future economic benefits, these costs are capitalised within software licences and amortised over the useful economic life of the asset. Development costs are capitalised only when it is probable that future economic benefit will result from the project and the following criteria are met: • the technical feasibility of the product has been ascertained; • Adequate technical, financial and other resources are available to complete and sell or use the intangible asset; • the group can demonstrate how the intangible asset will generate future economic benefits and the ability to use or sell the intangible asset can be demonstrated; • it is the intention of management to complete the intangible asset and use it or sell it; and • the development costs can be measured reliably. 1.6.3 subsequent expenditure subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. this includes legal and similar expenditure incurred in registering brands and trade names, which is capitalised, all other expenditure is expensed as incurred. 1.6.4 Amortisation Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. goodwill and trademarks with an indefinite useful life are systematically tested for impairment at each balance sheet date. other intangible assets are amortised from the date they are available for use. the estimated useful lives are as follows: software licence agreements 2-15 years non-contractual customer relationships 4 years GVC HOLDINGS PLC ANNUAL REPORT 2014 31 notes to the consolidated financial statements