Home' Slater and Gordon Annual Report : Slater and Gordon AR 2015 Contents 75
Annual Report 2015 Slater and Gordon Limited
Notes to the Financial Statements
For the Year Ended 30 June 2015
Slater and Gordon Limited
Note 1: Statement of Significant Accounting Policies (continued)
(h) Work in progress (“WIP”) (continued)
Vehicle hire and repair
Work in progress is recognised for the following transactions:
Incomplete WIP – where a car hire is still in use; and
Billing not completed – this occurs where the car hire has been returned or repairs completed where the invoice is
still outstanding (due to the time period required for all documentation to be in place before it is issued).
Work in progress is recognised based on the probable inflow of economic benefits flowing to the entity which occurs
before settlement by the insurer. Settlement could take considerable time to recover. A dilution rate is applied on the
invoice to recognise the fact that there may be a settlement adjustment with the insurer if the insurer disputes any costs.
This also takes into account the fact that some cases may not be ‘no fault’.
Medical reports and rehabilitation services
Work in progress is recognised when an appointment has been attended. The amount will remain in work in progress
until the discharge form has been received at which point the rehabilitation service is invoiced. This value remains in
work in progress until the number of sessions required is known at which point the invoice is raised.
Work in progress is calculated based on the average amount charged out, based on historic cases less a historic dilution
factor applied to reflect the fact that not all amounts will be billed.
For medical reports, the work in progress balance is calculated when the appointment is attended.
(i) Business combinations
A business combination is a transaction or other event in which an acquirer obtains control of one or more businesses
and results in the consolidation of the assets and liabilities acquired. Business combinations are accounted for by
applying the acquisition method.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquired. Deferred consideration payable is
measured at fair value. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date
Goodwill is recognised initially at the excess over the aggregate of the consideration transferred, the fair value of the
non-controlling interest, and the acquisition date fair value of the acquirer’s previously held equity interest (in case of step
acquisition), less the fair value of the identifiable assets acquired and liabilities assumed.
If the fair value of the acquirer's interest is greater than the aggregate of the consideration transferred, the fair value of
the non-controlling interest, and the acquisition date fair value of the acquirer’s previously held equity interest (in case of
step acquisition), the gain is immediately recognised in the profit or loss as gain from bargain purchases.
In conjunction with the business combination transaction there may be a transfer of assets between controlled entities as
part of restructuring the acquired business. The parent accounts for such transfers through reallocation of the cost of the
investments in its statement of financial position. Acquisition related costs are expensed as incurred.
Refer to Note 1(w) for the accounting policy change in respect of accounting for business combinations.
(j) Intangibles and goodwill
Software development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development costs are capitalised when it is probable that the project will be a success considering its commercial and
technical feasibility; the entity is able to use or sell the asset; the entity has sufficient resources and intent to complete
the development and its costs can be measured reliably. Capitalised development expenditure is stated at cost less
accumulated amortisation. Amortisation is calculated using a straight-line method to allocate the cost of the intangible
assets over their estimated useful lives. Amortisation commences when the intangible asset is available for use.
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