## NOTEs TO THE FINANCIAL sTATEMENTs 

FAIRFAx MEDIA LIMITED AND CONTROLLED ENTITIES FOR THE PERIOD ENDED 30 JUNE 2013 

## 1. sUMMARY OF sIGNIFICANT ACCOUNTING POLICIEs (CONTINUED) 

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through the income statement. 

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability is recognised in accordance with AASB 139 either in the income statement or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured until it is finally settled within equity. 

## (D) IMPAIRMENT OF ASSETS 

Intangibles, property, plant and equipment and investments accounted for using the equity method are tested for impairment annually, or at each reporting date where there is an indication that the asset may be impaired. 

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets, or groups of assets, which are called cash generating units. 

Assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. 

## (E) INTANGIBLES 

## (i) GoodWill 

Goodwill represents the excess of cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired entity at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. 

Goodwill is not amortised. It is carried at cost less accumulated impairment losses. Impairment losses relating to goodwill cannot be reversed in future periods. Goodwill is allocated to a cash generating unit (CGU) for the purposes of impairment testing. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which goodwill relates. Refer to Note 1(D). 

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity disposed. 

## (ii) oTHeR inTAnGiBle ASSeTS 

## Mastheads and tradenames 

The majority of mastheads and tradenames have been assessed to have indefinite useful lives. Accordingly, they are not amortised and are carried at cost less accumulated impairment losses. Mastheads and tradenames are tested for impairment in accordance with Note 1(D). 

The Group’s mastheads and tradenames operate in established markets with limited license conditions and are expected to continue to complement the Group’s new media initiatives. On this basis, the Directors have determined that the majority of mastheads and tradenames have indefinite lives as there is no foreseeable limit to the period over which the assets are expected to generate net cash inflows for the Group. 

There are a small number of tradenames that have been assessed to have a definite useful life and are amortised using a straight-line method over twenty years. 

## Radio licences 

Radio licences, being commercial radio licences held by the consolidated entity under the provisions of the Broadcasting Services Act 1992, have been assessed to have indefinite useful lives. Accordingly, they are not amortised and are carried at cost less accumulated impairment losses. Radio licences are tested for impairment in accordance with Note 1(D). 

## Websites 

Internal and external costs directly incurred in the development of websites are capitalised and amortised using a straight-line method over two to four years. Capitalised website costs are reviewed annually for potential impairment. 

## Computer software 

Computer software licences acquired are capitalised as an intangible as are internal and external costs directly incurred in the purchase or development of computer software, including subsequent upgrades and enhancements when it is probable that they will generate future economic benefits attributable to the consolidated entity. These costs are amortised using the straight-line method over three to five years. 

## other 

Other intangibles, where applicable, are stated at cost less accumulated amortisation and impairment losses. The useful life of the intangible assets are assessed to be either finite or indefinite and are examined on an annual basis and adjustments, where applicable, are made on a prospective basis. 

Other intangible assets created within the business are not capitalised and are expensed in the income statement in the period the expenditure is incurred. 

