Page 54 - Learn Africa 2021 Annual Report

Learn Africa Plc
Notes to the Financial Statements (cont’d)

For the year ended 31 March 2021

2.3.4 Warranty provisions
A provision is recognised for expected warranty claims on books sold during the last one
year, based on past experience of the level of returns. It is expected that most of these costs
will be incurred in the next financial year and all will have been incurred within one year
after the reporting date. Assumptions used to calculate the provision for warranties were
based on current sales levels and anticipated rate of return based on one-year warranty
period for all books sold in the prior year. Further details are provided in Note 19 of the
financial statements.

2.3.5 Taxes
Uncertainties exist with respect to the amount and timing of future taxable income.
Given the differences in the interpretation of the underlying principles of taxable income,
differences arising between the actual results and the assumptions made could necessitate
future adjustment to tax income and expenses already recorded. The Company establishes
provisions based on reasonable estimates.

Deferred taxes are recognised for all unused tax losses to the extent that it is probable that
taxable profit will be available against which the losses can be utilised. Significant
management judgement is required to determine the amount of deferred tax assets that can
be recognised, based upon the likely timing and the level of future taxable . Further details
of taxes are disclosed in Note 6.

2.4 Summary of significant accounting policies

The following are the significant accounting policies applied by Learn Africa Plc in
preparing its financial statements:

2.4.1 Intangible assets
Intangible assets include purchased computer software and software licences with finite
useful lives. Purchased software and software licenses are recognised as assets if there is
sufficient certainty that future economic benefits associated with the item will flow to the
entity.

Computer software primarily comprises external costs and other directly attributable costs.
Intangible assets acquired separately are measured on initial recognition at cost. Intangible
assets with finite lives are amortised over the useful economic life. The useful lives and
residual values of these intangible assets are assessed and reviewed every year. Changes in
the expected useful life or the expected pattern of consumption of future economic benefits

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