2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) (e) Intangible assets (i) Development and production assets Development and production assets comprise rights and concessions and producing oil and gas properties are measured at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, these intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of development and production assets is computed based on the unit of production method using proven and probable reserves. (ii) Software Software acquired by the Group is stated at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of software is recognised in profit or loss on a straight-line basis over the estimated useful lives from the date that it is available for use. The estimated useful lives is 3 to 6 years. (iii) Exploration and evaluation assets The costs of exploring for and evaluating oil and gas properties, including the costs of acquiring rights to explore, geological and geophysical studies, exploratory drilling and directly related overheads, are capitalised and classified as intangible exploration and evaluation assets. Costs incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward in relation to each area of interest to the extent that the following conditions are satisfied: • The rights to the tenure of an area of interest are current; and • At least one of the following conditions is also met: • Exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; or • Evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the areas of interest are continuing. Exploration and evaluation assets are not amortised prior to the conclusion of evaluation activities. At completion of evaluation activities, if technical feasibility is demonstrated and commercial reserves are discovered then, following development sanction, the carrying value of the exploration and evaluation asset is reclassified as a development and production asset, but only after the carrying value is assessed for impairment and where appropriate its carrying value adjusted. If, after completion of evaluation activities in an area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore expires or if the Group decides not to continue exploration and evaluation activity, then the costs of such unsuccessful exploration and evaluation are written off to profit or loss in the period the relevant events occur. 135 Financial Statements DAGANG NeXCHANGE BERHAD Integrated Report 2024 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2024
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