Development costs
We are constantly developing our products, both existing and new. These developments range from minor enhancements and bug fixes, to major new features and completely new products. The criteria in which we judge whether costs of development can be capitalised are as follows:
1) technical feasibility
(2) intention to complete and then use or sell
(3) commercial viability and
(4) ability to measure reliably the expenditure.
We apply judgement and estimates in determining the proportion of our total development spend that meets the above criteria. To make these judgements, we examine in detail the development activities over a period of time for each product. We make an estimate of the proportion of that time in which the development tasks that are being carried out meet the Capitalisation criteria. We then apply that proportion to the entire development spend for the period to determine the amount to be capitalised.
Capitalised costs are amortised over their useful economic life, which is estimated to be 5 years.
Other Intangible assets
Intangible fixed assets (including purchased goodwill and patents) are included at cost less accumulated amortisation.
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Goodwill and patents - 20% straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible, the amortisation is revised prospectively to reflect the new estimates.
In accordance with FRS 102 para 18.20 where management is unable to make a reliable estimate of the useful life of an intangible asset, the life should be presumed to be five years. Given that Ayoa was launched in June 2019, at this stage it is difficult to assess the useful life and as such the management has adopted the default position of five years. The position will continue to be monitored and adjusted accordingly should evidence suggest a different asset life.