Notes to the Consolidated Financial Statements  Cardno Limited and its Controlled Entities for the year ended 30 June 2010 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED  (n) Property, Plant and Equipment continued  Depreciation  Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for  cost, less its residual value.  Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item  of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives  unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.  The estimated useful lives for the current and comparative periods are as follows:  • buildings 40 years laboratory equipment, instruments and amenities  4-7 years  • equipment and motor vehicles  4-7 years  leasehold improvements 4-5 years • office furniture and equipment  3-11 years  Depreciation methods, useful lives and residual values are reviewed at each reporting date.  (o) Intangible Assets  Business Combinations and Goodwill  The Group has adopted revised AASB  3 Business Combinations (2008)  and amended AASB  127 Consolidated and  Separate Financial Statements (2008)  for business combinations occurring in the financial year starting 1 July 2009. All  business combinations occurring on or after 1 July 2009 are accounted for by applying the acquisition method. The  change in accounting policy is applied prospectively and had no material impact on earnings per share.  For every business combination, the Group identifies the acquirer, which is the combining entity that obtains control of  the other combining entities or businesses. Control is the power to govern the financial and operating policies of an entity  so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights  that currently are exercisable. The acquisition date is the date on which control is transferred to the acquirer. Judgement  is applied in determining the acquisition date and determining whether control is transferred from one party to another.  The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any  non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets  acquired and liabilities assumed, all measured as of the acquisition date. Subsequent to initial recognition, goodwill is  measured at cost less accumulated impairment losses. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the  previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the  fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced  mandatorily in the business combination.  Transaction costs that the Group incurs in connection with a business combination, such as finder’s fees, legal fees, due  diligence fees, and other professional and consulting fees, are expensed as incurred.  Works contracts and software intangibles  Works contracts and software intangibles are acquired by the consolidated entity and are stated at cost less accumulated  amortisation and impairment losses. Amortisation is calculated based on the timing of projected cash flows of the  contracts over their estimated useful lives, which currently vary from 1 to 7 years.  Patents and Licenses  Patents and licenses acquired by the consolidated entity are considered to have indefinite useful lives and are stated at  cost less any impairment losses. Patents and licences are not amortised but tested for impairment annually.  Subsequent expenditure  Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic  benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.  Page 36 of 80 