Accounting policies

Intangible assets

Computer software is carried at cost less accumulated amortisation and any recognised impairment loss. Externally acquired computer software and software licences are capitalised and amortised on a straight-line basis over their useful lives of three to seven years. Costs relating to the development of computer software for internal use are capitalised once all the development phase recognition criteria of IAS 38 "Intangible Assets" are met. When the software is available for its intended use, these costs are amortised in equal annual amounts over the estimated useful life of the software. Amortisation and impairment of computer software or licences are charged to administrative expenses in the period in which they arise. For the Group's impairment policy on non-financial assets see Note 3.2.

3.1.1 Intangible assets — computer software

Cost capitalisation

Amounts capitalised include the total cost of any external products or services and labour costs directly attributable to development. Management judgement is involved in determining the appropriate internal costs to capitalise and the amounts involved.

Estimation of useful life

The charge in respect of periodic amortisation is derived by estimating an asset's expected useful life and the expected residual value at the end of its life. Increasing an asset's expected life or its residual value would result in a reduced amortisation charge in the income statement. The useful life is determined by management at the time the software is acquired and brought into use and is regularly reviewed for appropriateness. For computer software licences, the useful life represents management's view of the expected period over which the Group will receive benefits from the software. For unique software products developed and controlled by the Group, the life is based on historical experience with similar products as well as anticipation of future events which may impact their useful life, such as changes in technology.

2 December
2012
£m
27 November
2011
£m
Cost
At the beginning of the period 45.0 34.4
Additions 0.9 2.4
Disposals (2.1)
Internal development costs capitalised 13.6 8.2
At the end of the period 57.4 45.0
Accumulated amortisation
At the beginning of the period (31.7) (26.3)
Disposals 2.1
Charge for the period (6.2) (5.4)
At the end of the period (35.8) (31.7)
Net book value
At the end of the period 21.6 13.3

The net book value of computer software held under finance leases is analysed below:

2 December
2012
£m
27 November
2011
£m
Cost 4.3 4.3
Accumulated amortisation (2.9) (2.7)
Net book value 1.4 1.6

The movement in cost includes assets of £nil (2011: £0.2 million) reclassified from owned assets to assets held under finance lease following asset based financing arrangements.

For the 53 weeks ended 2 December 2012, internal development costs capitalised represented approximately 94% (2011: 78%) of expenditure on intangible assets and 11% (2011: 7%) of total capital spend including property, plant and equipment.