40 annual report 2012  kAThMANdu (T) BORROWINGS (S) PROVISIONS (Q) INTANGIBLE ASSETS (i) Goodwill (ii) Brand (u) ShARE CAPITAL (iii) Software costs (V) EMPLOYEE BENEFITS (i) Wages and salaries, annual leave and sick leave (R) TRAdE ANd OThER PAYABLES liabilities for wages and salaries, including non-monetary  benefits, annual leave, and accumulating sick leave expected  to be settled within 12 months of the reporting date are  recognised in other payables in respect of employees’ services  up to the reporting date and are measured at the amounts  expected to be paid when the liabilities are settled. liabilities  for non-accumulating sick leave are recognised when the leave  is taken and measured at the rates paid or payable. the liability  for employee entitlements is carried at the present value of the  estimated future cash flows. these amounts represent liabilities for goods and services  provided to the Group prior to the end of financial year which  are unpaid. the amounts are unsecured and are usually paid  by the 30th of the month following recognition. trade payables  are recognised initially at fair value and subsequently measured  at amortised cost using the effective interest method. Costs associated with developing or maintaining computer  software programs are recognised as an expense as incurred.  Costs that are directly associated with the production of  identifiable and unique software products controlled by the  Group, and that will probably generate economic benefits  exceeding costs beyond one year, are recognised as  intangible assets. direct costs include the costs of software  development employees.  Software costs have a finite useful life. Software costs are  capitalised and written off over the useful economic life using  diminishing value method and rates of 10-60%. Where any Group company purchases the Company’s  equity share capital (treasury shares), the consideration paid,  including any directly attributable incremental costs (net of  income taxes) is deducted from equity attributable to the  Company’s equity holders until the shares are cancelled or  reissued. Where such shares are subsequently reissued,  any consideration received net of any directly attributable  incremental transaction costs and the related income tax  effects, is included in equity attributable to the Company’s  equity holders. Incremental costs directly attributable to the issue of new  shares are shown in equity as a deduction, net of tax, from  the proceeds. ordinary shares are classified as equity. acquired brands are carried at original cost based on  independent valuation obtained at the date of acquisition.  the brand represents the price paid to acquire the rights  to use the Kathmandu brand. the brand is not amortised.  Instead the brand is tested for impairment annually or more  frequently if events or changes in circumstances indicate that  it might be impaired, and is carried at cost less accumulated  impairment losses. Goodwill is allocated to cash-generating units for the purpose  of impairment testing. the allocation is made to those cash- generating units or groups of cash-generating units that are  expected to benefit from the business combination in which  the goodwill arose.  Borrowings are initially recognised at fair value, net of  transaction costs incurred. Borrowings are subsequently  measured at amortised cost. any difference between the  proceeds (net of transaction costs) and the redemption  amount is recognised in the income statement over the period  of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group  has an unconditional right to defer settlement of the liability for  at least 12 months after the balance sheet date. Goodwill arises on the acquisition of subsidiaries. Goodwill  represents the excess of the cost of the acquisition over  the Group’s interest in the net fair value of the assets and  liabilities of the acquiree. Separately recognised goodwill  is tested annually for impairment and carried at cost less  accumulated impairment losses. Impairment losses on  goodwill are not reversed. a provision is recognised if, as a result of a past event, the  Group has a present legal or constructive obligation that can  be estimated reliably, and it is probable that an outflow of  economic benefits will be required to settle the obligation.  provisions are determined by discounting the expected future  cash flows at a pre-tax rate that reflects current market  assessments of the time value of money and the risks specific  to the liability. the Group has no provisions at year end. Gains and losses on disposals are determined by comparing  proceeds with carrying amount. these are included in the  income statement.