INTANGIBLE ASSETS PROPERTY, PLANT AND EQUIPMENT Intangible assets comprise of software development, Owned assets licences, rights to brands and customer lists, are stated at Items of property, plant and equipment are stated at historical cost less accumulated amortisation and impairment. Costs cost less accumulated depreciation and impairment losses. incurred in developing the Group’s own brands are expensed Cost includes the original purchase price of the asset and as incurred. the costs attributable to bringing the asset to its working condition for intended use. Separately acquired brands and customer lists are shown at historical cost. Software, brands and customer lists acquired Where parts of an item of property, plant and equipment have in a business combination are recognised at fair value at different useful lives, they are accounted for as separate items the acquisition date. These assets are deemed to have a of property, plant and equipment. finite useful life and are carried at cost less accumulated amortisation.Amortisation is calculated using the straight-line Depreciation method to allocate the cost over the estimated useful life. Depreciation is charged to the Consolidated Income Acquired computer software licences are capitalised on Statement on a straight-line basis over the estimated useful the basis of the costs incurred to acquire and bring to use lives of each part of an item of property, plant and equipment, the specific software. These costs are amortised over their to write down the cost to its estimated residual value. Land is estimated useful lives. not depreciated. The estimated useful lives are as follows: Freehold buildings 50 years Costs associated with maintaining computer software Leasehold improvementsover the remaining period programmes are recognised as an expense as incurred. of the lease Development costs that are directly attributable to the design Refit improvements 7 years and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets Plant and machinery 4 years when the following criteria are met: Fixtures and fittings 3 to 5 years • It is technically feasible to complete the software product so The assets’ residual values and useful lives are reviewed and that it will be available for use; adjusted if appropriate at the end of each reporting period. • Management intends to complete the software product and An asset’s carrying amount is written down immediately to its use or sell it; recoverable amount if the asset’s carrying amount is greater • There is an ability to use or sell the software product; than its estimated recoverable amount. • It can be demonstrated how the software product will generate probable future economic benefits; LEASES • Adequate technical, financial and other resources to Lease recognition complete the development and to use or sell the software At the inception of a contract, the Group assesses whether a product are available; and contract is, or contains, a lease. A contract is, or contains, a • The expenditure attributable to the software product lease if it conveys the right to control the use of an identified during its development can be reliably measured. asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use Other development expenditures that do not meet these of an identified asset, the Group uses the definition of a lease criteria are recognised as an expense as incurred. in IFRS 16. Computer software development costs recognised as assets Right-of-use assets are amortised over their estimated useful lives. The Group recognises right-of-use assets at the commencement date ofthe lease. Right-of-use assets Amortisation are measured at cost, less accumulated depreciation and impairment losses and adjusted for any remeasurement Amortisation is charged to the Consolidated Income of lease liabilities. The cost of right-of-use assets includes Statement on a straight-line basis over the estimated useful the amount of lease liabilities recognised, adjusted for any life of the asset. These are as follows: lease payments made at or before the commencement Software development and licences 3 to 5 years date, less any lease incentives received. Right-of-use assets Rights to brands and customer lists 5 to 15 years are depreciated over the shorter of the asset’s useful life or the lease term on a straight-line basis. Right-of-use assets are subject to, and reviewed regularly for, impairment. Depreciation of right-of-use assets is included in operating costs in the Consolidated Income Statement. DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021 193 FINANCIAL STATEMENTSSTRATEGIC REPORTGOVERNANCE OTHER INFORMATION