PPS Integrated Report 2021 149 | Group Accounting Policies Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows: ~Buildings 50 years ~Vehicles 5 years ~Computer hardware and acquired software 3 years ~Furniture and fittings 6 years ~Office equipment 5 years ~Leasehold improvements the lesser of 5 years or the period of the lease ~Right-of-use assets the lesser of the life of the asset or lease term Land is not depreciated. The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate. An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are included in the Statement of Profit or Loss and Other Comprehensive Income and are determined by comparing sales proceeds with the carrying amount. 9. INTANGIBLE ASSETS Computer software development costs Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as an intangible asset when the following criteria are met: ~ it is technically feasible to complete the software product so that it will be available for use; ~ management intends to complete the software product and use or sell it; ~ there is an ability to use or sell the software product; ~ it can be demonstrated how the software product will generate probable future economic benefits; ~ adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and ~ the expenditure attributable to the software product during its development can be reliably measured. Direct costs include the external software development team’s costs. Computer software acquired as part of the software development project is capitalised on the basis of the acquisition costs and related costs to bring it to use. All other costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Computer software development costs recognised as assets are amortised, from the date the asset is available for use, using the straight-line method over their useful lives, not exceeding a period of five years. The useful lives of the assets are reviewed at each reporting date and adjusted if appropriate. Customer Relationships Customer relationships consist of acquired rights to income streams on an existing financial adviser book of business. These customer relationships are recognised at cost less accumulated amortisation and impairment. Amortisation is calculated using the straight-line method over the estimated useful lives of an average eight years. The useful life of customer relationships is estimated based on the cancellation experience of the acquired book of business at a product level.
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