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

322 MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2022-23 2. Significant Accounting Policies (contd.) 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 Group’s expected usage pattern supported by technical assessment: Asset Class Useful lives (i) Plant and equipment 2-25 years (ii) Buildings, including roads 3-60 years (iii) Vehicles 2-10 years g) Goodwill and Intangible Assets Goodwill is initially recognised as the excess of consideration paid and acquirer’s interest in the net fair value of the identifiable net assets of acquired business. Subsequent to initial measurement, goodwill is measured at cost less accumulated impairment, if any. Goodwill is allocated to the cash-generating unit which is expected to benefit from the business combination. Intangible assets are initially recognised at cost except those acquired in a business combination. Subsequent to initial recognition, 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 Group 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 acquired under business combination Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value on the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Other intangible assets Technical Knowhow The expenditure incurred is amortised over the estimated period of benefit, commencing with the year of purchase of the technology. 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. Brand license fee The expenditure incurred is amortised over the period of relevant licence fee or the estimated period of benefit, whichever is lower. Software Expenditure The expenditure incurred is amortised over 36 months commencing from the year in which the expenditure is incurred. 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. h) Impairment of Assets At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash-generating unit, as the case may be, is estimated and impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount. When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) earlier. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.