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116 CA Sri Lanka Integrated Annual Report 2024

Notes to the Financial Statements Contd.

The estimated useful lives of right of use such lease payments) or a change in the (b) Study Material
assets are as follows: assessment of an option to purchase the Costs that are directly attributable to the
Useful Life underlying asset. development of curriculum and study
Asset Category (Years) materials of the CA qualifications are
(d) Derecognition recognised as intangible assets when it is
Right of use asset 10
An item of property, plant and equipment technically feasible to implement the new
Improvements to Right of 10 is derecognised upon disposal or when curriculum, the investment attributable
use asset no future economic benefits are expected to the project during its development
from its use or disposal. Any gain or loss period can be reliably measured and it
Depreciation of improvement to right arising on derecognition of the asset is can be demonstrated that it will generate
of use asset is calculated based on the calculated as the difference between the probable future economic benefits.
remaining lease period. net disposal proceeds and the carrying
amount and included in the statement of These costs are amortised over the
At the commencement date of the lease comprehensive income in the year, the effective period of the curriculum and the
the Institute recognises lease liability asset is derecognised. remaining useful life is reviewed at least at
measured at the present value of the each financial reporting year end.
lease payments to be made over the 2.1.2 Library Books
lease term, the lease payments include Cost of library books are written off on the 2.1.5 Inventories
fixed payments (including in-substance straight-line basis over a period of three Inventories are stated at the lower of cost
fixed payments) less any lease incentives years. and net realisable value after making
receivable, variable lease payments due allowances for obsolete and slow-
that depend on an index or a rate, and 2.1.3 Capital Work-In-Progress moving items. Net realisable value is the
amounts expected to be paid under Capital work-in-progress is stated estimated selling price in the ordinary
residual value guarantees. The lease at cost, less any impairment losses. course of business less the estimated
payments also include the exercise price These are expenses of a capital nature, cost of completion and selling expenses.
of a purchase option reasonably certain directly incurred in the construction of The cost of inventories is based on
to be exercised by the Institute and property, plant and equipment awaiting weighted average cost. The cost includes
payments of penalties for terminating capitalisation. Capital work-in-progress expenditure incurred in acquiring the
the lease, if the lease term reflects would be transferred to the relevant inventories and bringing them to their
the Institute exercising the option to asset category in property, plant and existing location and condition.
terminate. Variable lease payments that equipment, when it is available for use i.e.
do not depend on an index or a rate are when it is in the location and conditions The inventories of the Institute include
recognised as expenses (unless they are necessary for it to be capable of operating study packs, study material, publications,
incurred to produce inventories) in the in the manner intended by the Institute. stationery and consumables.
period in which the event or condition
that triggers the payment occurs. 2.1.4 Intangible Assets 2.1.6 Impairment of Non-Financial
Assets
In calculating the present value of (a) Computer Software The Institute assesses at each reporting
lease payments, the Institute uses its Acquired computer software licenses date whether there is an indication
incremental borrowing rate at the lease are capitalised on the basis of the costs that an asset may be impaired. If such
commencement date as the discount incurred to acquire and bring to use. an indication exists or when annual
rate, because the interest rate implicit These costs are amortised over their impairment testing for an asset is
in the lease is not readily determinable. estimated useful life of five to ten (5-10) required, the Institute makes an estimate
The Institute determines its incremental years. of the asset’s recoverable amount. An
borrowing rate by obtaining interest rates asset’s recoverable amount is the higher
from the Institute’s internal records. After Costs associated with maintaining of an asset’s fair value less costs to sell
the commencement date, the amount computer software programmes are and its value in use and determined
of lease liabilities is increased to reflect recognised as an expense as incurred. for an individual asset, unless the asset
the accretion of interest and reduced for Costs recognized as intangible assets does not generate cash inflows that are
the lease payments made. In addition, are amortised over their estimated useful largely independent of those from other
the carrying amount of lease liabilities lives, which do not exceed ten (10) years. assets or group of assets. Where the
is remeasured if there is a modification, Costs relating to development of software carrying amount of an asset exceeds
a change in the lease term, a change are carried in capital work in progress until its recoverable amount, the asset is
in the lease payments (e.g., changes to the software is ready for use. considered impaired and is written down
future payments resulting from a change to its recoverable amount. In assessing
in an index or rate used to determine value in use, the estimated future cash