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Only costs that are directly attributable to bringing the asset to working condition for its intended use are included
in its measurement. These costs include all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in a manner intended
by management.
Intangible assets are carried
at cost less accumulated amortisation and impairment losses, if any. Those are amortised on a straight-line basis over a period of three years (except for the extensible Business Reporting Language (XBRL) software as mentioned in the following paragraph and Microsoft Dynamics AX which is amortised over a period of five years), commencing when the
asset is available for its intended use. This expense is reported
as an administration expense
in the statement of comprehensive income.
“Extensible Business Reporting Language” software is carried
at cost less accumulated amortisation. It is being amortised on a straight line basis over a period of five years commencing when the asset is available for
its intended use. This expense is reported as an administration expense in the statement of comprehensive income.
Subsequent expenditure is only capitalised when it increases the future economic benefits embodied in the specific
asset to which it relates. Where no intangible asset can be recognised, development expenditure is charged to the statement of comprehensive income when incurred.
Expenditure on research or on the research phase of an internal project is recognised as an expense in the period in which it is incurred.
3.3 Summary of significant accounting policies
Revenue recognition
Fee income arising on application processing is non- refundable and accordingly is recognised as income when received. Annual license fees are recognised as income on a straight line basis over the period to which they relate.
Financial penalties
Under the Financial Services Regulations (FSR), the Regulatory Authority has the power to impose financial penalties where it considers that a
Person (as defined in the FSR) has contravened a relevant requirement set out in Article 84 (1) of the FSR. The principles to be followed by the Regulatory Authority in determining the amount of any financial penalty to be imposed in respect of such contraventions are set out in the Regulatory Authority’s Financial Services (Financial Penalties and Public Censures) Policy 2009. The financial penalties
are accounted on an accrual basis on the date stipulated
in the order and the income
is reported in the statement of comprehensive income.
Interest income
Interest income is recognized on accrued basis, using the effective interest rate method (EIR).
Appropriations from the Government
Appropriations from the Government are recognised at their fair value when there is a reasonable assurance that the appropriations will be received by the Regulatory Authority, and are recognised in the statement of activities over the period necessary to match them with the costs that they are intended to compensate. The excess appropriations provided by
the Government are treated
as appropriations received
in advance under accounts payable and accrual and are carried forward to next year.
Intangible assets
Intangible assets include cost of computer software purchased and software developed in- house. Intangible assets acquired separately are measured on initial recognition at cost. Costs associated with the development of software for internal use are capitalised only if the design
of the software is technically feasible, and the Regulatory Authority has both the resources and intent to complete its development and ability to use it upon completion. In addition, costs are only capitalised if
the asset can be separately identified, it is probable that
the asset will generate future economic benefits, and that the development cost of the asset can be measured reliably.
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