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Notes to the Consolidated Financial Statements

31st March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.8 Intangible assets

(a) Goodwill

Goodwill arises on the acquisition of subsidiaries represents the excess of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the
identified net assets acquired.

For the purpose of impairment testing, goodwill acquired in a business combination is
allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected
to benefit from the synergies of the combination. Each unit or group of units to which the
goodwill is allocated represents the lowest level within the entity at which the goodwill
is monitored for internal management purposes. Goodwill is monitored at the operating
segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes
in circumstances indicate a potential impairment. The carrying value of goodwill is compared
to the recoverable amount, which is the higher of value in use and the fair value less costs of
disposal. Any impairment is recognised immediately as an expense and is not subsequently
reversed.

(b) Acquired licence right

An acquired licence right is carried at cost less accumulated amortisation. The economic
useful life of an acquired licence right is estimated at the time of purchase (Note 4(b)).

Amortisation is calculated using the straight-line method to allocate the cost of the acquired
licence over its estimated useful life of 10 years.

Licence right is tested for impairment annually, in accordance with HKAS 36.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2015 43