Note 16 - Intangible assets
| Goodwill | Acquired intellectual property rights to games for platforms | Capitalised expenditure for development works in respect of games for platforms | Total | |
|---|---|---|---|---|
| Opening balance, 1 September 2017 | 7,976 | 4,495 | 26,481 | 38,952 |
| Additions | 68,237 | 37,600 | 19,954 | 125,791 |
| Exchange rate differences | 1,202 | 0 | 0 | 1,202 |
| Depreciation | 0 | -7,316 | -18,342 | -25,658 |
| Impairments | 0 | 0 | 0 | 0 |
| Closing balance, 31 August 2018 | 77,415 | 34,779 | 28,093 | 140,287 |
| Opening balance, 1 September 2018 | 77,415 | 34,779 | 28,093 | 140,287 |
| Additions | 0 | 0 | 23,666 | 23,666 |
| Exchange rate differences | 67 | 0 | 0 | 67 |
| Depreciation | 0 | -3,760 | -18,951 | -22,711 |
| Impairments | 0 | 0 | 0 | 0 |
| Closing balance, 31 August 2019 | 77,482 | 31,019 | 32,808 | 141,309 |
Impairment testing of goodwill
Below is a summary of goodwill
| Opening carrying amount | Additions | Sales | Impairment | Translation difference | Closing carrying amount | |
|---|---|---|---|---|---|---|
| 8/31/2019 | 77,415 | 0 | 0 | 0 | 67 | 77,482 |
| 8/31/2018 | 7,976 | 69,439 | 0 | 0 | 0 | 77,415 |
Impairment testing of goodwill
Based on the fact that goodwill relates in its entirety to the acquisitions of MAG Games Ltd (formerly Delinquent Interactive Ltd) and FEO Media AB, which are both fully integrated into MAG Interactive AB, the MAG Group is considered to constitute the smallest cash-generating unit for which the valuation of goodwill can be performed.
The value of goodwill is tested annually against the estimated recoverable value, which is either the value in use or the fair value minus sales-related costs. Goodwill has been tested against the value in use as of 8/31/2019 and as of 8/31/2018.
The value in use is based on estimated assessments of future cash flows before tax, which are based on reasonable and verifiable assumptions that represent the best estimates of the economic conditions that are expected to prevail. The assessment of future cash flows is based on budgets and forecasts for the period of the next three years. Cash flows after the forecast period are estimated with an assumption of a long-term rate of growth after the forecast period of 2 per cent per annum for 31 August 2019 (31 August 2018: 2 per cent).
Important assumptions in this estimate include the discount rate, sales growth and EBITDA margins.
The discount rate before tax is 13 per cent for 31 August 2019 (31 August 2018: 13 per cent).
No reasonable possible change in important assumptions would cause the carrying amount to exceed the recoverable value.