42 INOVIQ Limited 2 SUMMARY OF SIGNIFICANT 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% - 25.00% straight line The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each end of 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 Purchased intellectual property is tested for impairment annually 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. To determine fair value management estimates 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 assets that remain in the research stage the group relies on the replacement cost method to test an asset for impairment. 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 generally 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. Goodwill on Acquisition was recognised when the Company merged with Sienna Cancer Diagnostics Ltd in July 2020. Management determined that there was considerable goodwill generated from the merger of INOVIQ and Sienna and therefore not reasonable to allocate goodwill across CGU’s. Notes to the Financial Statements for the year ended 30 June 2022
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