40 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Intangible assets (continued) Intangible assets with indefinite useful lives and intangible assets under development are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable. Intangible assets are amortised using the straight line basis over their estimated useful lives as follows: Intangible assets Estimated useful lives (years) Brand 20 to 26 Software 3 to 5 Land use rights 35 Others 18 Amortisation on intangible assets under development commences when the assets are ready for their intended use. The nature of the intangible assets are as follows: (i) Brand relates to sugar brand ‘Prai’ and consumer brands ‘Saji’, ‘Seri Pelangi’, ‘SunFlower’, ‘SunBear’, and ‘Yangambi’ acquired as part of the acquisition of the related business. (ii) Software relates to information technology (“IT”) used within the Group. (iii) Land use rights relates to oil palm plantations in Indonesia. (iv) Intangible assets under development relates to IT system under development. (m) Biological assets Oil Palm The Group attribute a fair value on the fresh fruit bunches (“FFB”) at each statement of financial position date as required under MFRS 141 “Agriculture”. FFB are produce of oil palm trees and are harvested continuously throughout the financial year to be used in the production of crude palm oil (“CPO”). Each FFB takes approximately 22 weeks from pollination to reach maximum oil content to be ready for harvesting. The value of each FFB at each point of the FFB production cycle will vary based on the cumulative oil content in each fruit. In determining the fair values of FFB, management has considered the oil content of all unripe FFB from the week after pollination to the week prior to harvest. As the oil content accrues exponentially in the 15 days prior to harvest, the FFB prior to 15 days before harvesting are excluded in the valuation as the fair values are considered negligible. The valuation model adopted by the Group is a discounted cash flows model which includes all cash inflows, cash outflows and imputed contributory asset charges where no actual cash flows associated with the use of assets essential to the agricultural activity are accounted for. The net present value of cash flows is then determined with reference to the market value of crude palm oil at the date of harvest, adjusted for freight, extraction rates, production, transportation, contributory asset charges and other cost to sell at the point of harvest. Dairy cows The fair value of dairy cows is determined based on income approach (Level 3 computation) for calves, computed using discounted cash flows model making reference on the assumptions of expected raw milk yield, raw milk price, mortality rate, feed cost, farm cost, contributory assets charges and other costs that will be incurred throughout the remaining periods up to its transformation into heifers. For heifers and mature dairy cows, the fair value are determined based on market approach (Level 2 computation), computed using recent market transactions, and adjusted accordingly to reflect the age, weight and body score.
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