2 MATERIAL ACCOUNTING POLICIES (CONTINUED) Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Building improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. Items of property, plant, and equipment are depreciated over their estimated useful lives. The depreciation rates for each class of asset are: Class of Non-Current Asset Depreciation Rate Building improvements 16.87% - 19.59% straight line Office furniture and equipment 5.00% - 50.00% straight line Research equipment 5.00% - 50.00% straight line The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the income statement. (xi) Intangibles Patents Patents are recognised at cost of acquisition or the cost of application and grant. Patents have a finite life and are recognised on the balance sheet at cost less any accumulated amortisation and any impairment losses. Patents are amortised on a straight-line basis over the term of the patent commencing from the time the patent is registered. Trademarks Trademarks are recognised at the cost of application and grant. Trademarks generally have an infinite life and are recognised on the balance sheet net of any impairment. Purchased Intellectual Property Purchased intellectual property is recognised at the cost of acquisition or value attributed on business combination. Purchased intellectual property has a finite life and is recognised on the balance sheet at cost less any accumulated amortisation and any impairment losses. Impairment of Purchased Intellectual Property An intangible asset is tested for impairment annually where it has an indefinite useful life or is not yet available for use, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). An impairment loss is recognised for the amount by which the asset’s (or cash-generating unit’s) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. For intangible assets where management can reliably estimate the future cash flows, they determine recoverable amount using a value in use model by estimating the expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. Discount factors are determined individually for each cash-generating unit and reflect current market assessments of the time value of money and asset-specific risk factors. For intangible assets which are not yet available for use or where management cannot reliably estimate the future cash flows, they determine the recoverable amount using a replacement cost approach. The replacement cost approach reflects the amount that would be required currently to replace the service capacity of an asset less any wastage, obsolescence and costs of disposal. Assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment loss is reversed if the asset’s recoverable amount exceeds its carrying amount. (xii) Goodwill Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. Goodwill is carried at cost less accumulated impairment losses. Impairment of Goodwill Goodwill is allocated to those Cash-Generating Units (CGU’s) that are expected to benefit from synergies of a related business combination and represent the lowest level within the Group at which management monitors goodwill. Notes to the Financial Statements continued for the year ended 30 June 2025 38 INOVIQ Limited
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