MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2022-23

244 MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2022-23 (iv) Impairment of investments The Company assesses impairment of investments in subsidiaries, associates and joint ventures which are recorded at cost. At the time when there are any indications that such investments have suffered a loss, if any, is recognised in the statement of Profit and Loss. The recoverable amount requires estimates of operating margin, discount rate, future growth rate, terminal values, etc. based on management’s best estimate. (e) Property, plant and equipment Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and accumulated impairment, if any. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying tangible assets upto the date the assets are ready for use. Depreciation is provided on straight-line basis for property, plant and equipment so as to expense the depreciable amount, i.e. the cost less estimated residual value, over its estimated useful lives. The estimated useful lives and residual values are reviewed annually and the effect of any changes in estimate is accounted for on a prospective basis. When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account and resultant profit or loss, if any, is reflected in the Statement of Profit and Loss. The management’s estimate of useful lives are in accordance with Schedule II to the Companies Act, 2013, other than the following asset classes, based on the Company’s expected usage pattern supported by technical assessment: Asset Class Useful lives (i) Certain items of Plant and Equipment 2 - 25 years as the case may be. (ii) Buildings (Roads) 15 years (iii) Vehicles 5 years (f) Intangible assets Intangible assets are initially recognised at cost. Intangible assets with definite useful lives are amortised on a straight line basis so as to reflect the pattern in which the asset’s economic benefits are consumed. Intangible assets under development The Company expenses costs incurred during research phase to profit or loss in the year in which they are incurred. Development phase expenses are initially recognised as intangible assets under development until the development phase is complete, upon which the amount is capitalised as intangible asset. Intangible assets i) Technical Knowhow The expenditure incurred is amortised over the estimated period of benefit, commencing with the year of purchase of the technology. ii) Development Expenditure The expenditure incurred on technical services and other project/product related expenses are amortised over the estimated period of benefit, not exceeding 60 months. iii) Brand license fee The expenditure incurred is amortised over the period of relevant licence fee or the estimated period of benefit, whichever is lower. iv) Software Expenditure The expenditure incurred is amortised over three financial years equally commencing from the year in which the expenditure is incurred. v) Others The expenditure incurred is amortised over the estimated period of benefit. The amortisation period for intangible assets with finite useful lives are reviewed annually and changes in expected useful lives are treated as changes in estimates. 2. Significant Accounting Policies: (contd.)