Page 90 - 2596-CA SR Lanka- Annual Report 2022

NOTES TO THE FINANCIAL STATEMENTS

Asset category Useful life (years) (d) Derecognition 2. Management intends to complete
the software product and use it;
Right of use asset 10 An item of property, plant and equipment
is derecognised upon disposal or when
Improvements to 10 no future economic benefits are expected 3. there is an ability to use the
Right of use asset software product;
from its use or disposal. Any gain or loss
arising on derecognition of the asset is
Depreciation of improvement to right calculated as the difference between the 4. it can be demonstrated how the
of use asset is calculated based on the net disposal proceeds and the carrying software product will generate
remaining lease period. probable future economic benefits;
amount and included in the statement of
comprehensive income in the year, the
At the commencement date of the lease 5. adequate technical, financial and
the Institute recognises lease liability asset is derecognised. other resources to complete
measured at the present value of the the development and to use the
lease payments to be made over the 2.1.2 Library Books software product are available; and
lease term, the lease payments include Cost of library books are written off on the
fixed payments (including in-substance straight-line basis over a period of three 6. the expenditure attributable to
fixed payments) less any lease incentives years. the software product during its
receivable, variable lease payments development can be reliably
that depend on an index or a rate, and 2.1.3 Capital Work-In-Progress measured.
amounts expected to be paid under Capital work-in-progress is stated at
residual value guarantees. The lease cost, less any impairment losses. Directly attributable costs that are
payments also include the exercise price These are expenses of a capital nature, capitalised as part of the software
of a purchase option reasonably certain directly incurred in the construction of product include the software
to be exercised by the Institute and property, plant and equipment awaiting development employee costs and
payments of penalties for terminating capitalisation. Capital work-in-progress an appropriate portion of relevant
the lease, if the lease term reflects would be transferred to the relevant asset overheads.
the Institute exercising the option to category in property, plant and equipment,
terminate. Variable lease payments that when it is available for use i.e. when it is Costs recognized as intangible
do not depend on an index or a rate are in the location and conditions necessary assets are amortised over their
recognised as expenses (unless they are for it to be capable of operating in the estimated useful lives, which
incurred to produce inventories) in the manner intended by the Institute. do not exceed ten (10) years.
period in which the event or condition that Costs relating to development of
triggers the payment occurs. 2.1.4 Intangible Assets software are carried in capital work
a. Computer Software in progress until the software is
In calculating the present value of Acquired computer software ready for use.
lease payments, the Institute uses its licenses are capitalised on the
incremental borrowing rate at the lease basis of the costs incurred to b. Study Material
commencement date because the acquire and bring to use. These Costs that are directly attributable
interest rate implicit in the lease is not costs are amortised over their to the development of curriculum
readily determinable. The Institute uses estimated useful life of five to ten and study materials of the CA
its incremental borrowing rate as the (5-10) years. qualifications are recognised
discount rate. The Institute determines its as intangible assets when it is
incremental borrowing rate by obtaining Costs associated with maintaining technically feasible to implement
interest rates from the Institute's internal computer software programmes the new curriculum, the
records. After the commencement date, are recognised as an expense as investment attributable to the
the amount of lease liabilities is increased incurred. Costs that are directly project during its development
to reflect the accretion of interest and associated with the production of period can be reliably measured
reduced for the lease payments made. identifiable and unique software and it can be demonstrated that
In addition, the carrying amount of lease products controlled by the Institute it will generate probable future
liabilities is remeasured if there is a are recognised as intangible assets economic benefits.
modification, a change in the lease term, when the following criteria are
a change in the lease payments (e.g., met: These costs are amortised
changes to future payments resulting over the effective period of the
from a change in an index or rate used 1. it is technically feasible to curriculum and the remaining
to determine such lease payments) or a complete the software product so useful life is reviewed at least at
change in the assessment of an option to that it will be available for use; each financial reporting year end.
purchase the underlying asset.

88 CA SRI LANKA | Integrated Annual Report 2022