Carphone Warehouse 2014 Annual Report Download - page 68

Carphone Warehouse Group plc
Annual Report 2014
66
FINANCIAL STATEMENTS
Notes to the Group financial statements continued
1 ACCOUNTING POLICIES continued
f) PENSIONS
Contributions to defined contribution schemes are charged to the income statement as they become payable in accordance with therules
of the schemes.
g) DIVIDENDS
Dividend income is recognised when payment has been received. Final dividend distributions are recognised as a liability in the financial
statements in the year in which they are approved by shareholders. Interim and other dividends are recognised in the year in which they are paid.
h) LEASES
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
tothelessee. All other leases are classified as operating leases.
THE GROUP AS LESSOR
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line
basis over the lease term.
THE GROUP AS LESSEE
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of minimum
lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet
asa finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance expenses are recognised immediately in the income statement, unless they are
directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing
costs (see note r). Contingent rentals are recognised as expenses in the periods in which they are incurred.
Rental payments under operating leases are charged to the income statement on a straight-line basis over the period of the lease except
where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are
consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives and rent-free periods are received to enter into operating leases, such incentives are amortised through
the income statement over the period of the lease.
i) TAXATION
Current tax, including UK corporation tax and overseas tax, is provided at amounts expected to be paid or recovered using the tax rates
andlaws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is provided in full on temporary differences between the carrying amount of an asset or liability in the balance sheet
anditstaxbase.
Deferred tax liabilities represent tax payable in future periods in respect of taxable temporary differences. Deferred tax assets represent
taxrecoverable in future periods in respect of deductible temporary differences, and the carry-forward of unused tax losses and credits.
Deferred tax is determined using the tax rates that have been enacted or substantively enacted at the balance sheet date and are expected
to apply when the deferred tax asset is realised or the deferred tax liability is settled.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset
can be utilised. Current and deferred tax is recognised in the income statement except where it relates to an item recognised directly
inreserves, in which case it is recognised directly in reserves.
Deferred tax assets and liabilities are offset where there is a legal right to do so in the relevant jurisdictions.
j) GOODWILL AND INTANGIBLE ASSETS
GOODWILL
Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing the excess of the fair value of the consideration
given over the fair value of the identifiable assets and liabilities acquired, is recognised initially as an asset at cost and is subsequently
measured at cost less any accumulated impairment losses. At the acquisition date, goodwill is allocated to each of the CGUs expected to
benefit from the combination and held in the currency of the operations to which the goodwill relates. Goodwill is reviewed at least annually for
impairment, or more frequently where there is an indication that goodwill may be impaired. Impairment is determined by assessing the future
cash flows of the CGUs to which the goodwill relates. Where the future cash flows are less than the carrying value of goodwill, an impairment
charge is recognised in the income statement.
On disposal of subsidiary undertakings and businesses, the relevant goodwill is included in the calculation of the profit or loss on disposal.