National Grid 2008 Annual Report Download - page 634

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 10194
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 107
Description: EXHIBIT 15.1
0/4303.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/303/4*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 10194
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 107 Description: EXHIBIT 15.1
0/4303.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/303/4*
Table of Contents
Annual Report and Accounts 2007/08
115
D. Goodwill
Goodwill arising on a business combination represents the
difference between the cost of acquisition and the
Company’s consolidated interest in the fair value of the
identifiable assets and liabilities of a subsidiary or joint
venture as at the date of acquisition.
Goodwill is recognised as an asset and is not amortised, but
is reviewed for impairment at least annually. Any impairment
is recognised immediately in the income statement and is
not subsequently reversed.
Goodwill recorded under UK GAAP arising on acquisitions
before 1 April 2004, the date of transition to IFRS, has been
frozen at that date, subject to subsequent testing for
impairment.
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing
exchange rate.
E. Intangible assets other than goodwill
With the exception of goodwill, as described above,
identifiable intangible assets are recorded at cost less
accumulated amortisation and any provision for impairment.
Internally generated intangible fixed assets, such as
software, are recognised only if an asset is created that can
be identified; it is probable that the asset created will
g
enerate future economic benefits; and that the development
cost of the asset can be measured reliably. Where no
internally generated intangible asset can be recognised,
development expenditure is recorded as an expense in the
period in which it is incurred.
On a business combination, as well as recording separable
intangible assets possessed by the acquired entity at their
fair value, identifiable intangible assets that arise from
contractual or other legal rights are also included in the
balance sheet at their fair value. Acquisition-related
intangible assets principally comprise customer
relationships.
Non-current intangible assets, other than goodwill, are
amortised on a straight-line basis over their estimated
economic useful lives. Amortisation periods for categories of
intangible assets are:
Intangible emission allowances are accounted for in
accordance with accountin
g
p
olic
y
V.
Amortisation periods Years
Software 3 to 5
Ac
q
uisition-related intan
g
ibles 10 to 25
Other
–
telecommunication licences 10 to 25
–
other licences and other intan
g
ibles 3 to 5
F. Property, plant and equipment
Property, plant and equipment is recorded at cost or deemed
cost at the date of transition to IFRS, less accumulated
depreciation and any impairment losses.
Cost includes payroll and finance costs incurred which are
directly attributable to the construction of property, plant and
equipment as well as the cost of any associated asset
retirement obligations.
Property, plant and equipment includes assets in which
National Grid’s interest comprises legally protected statutory
or contractual rights of use.
Additions represent the purchase or construction of new
assets, including capital expenditure for safety and
environmental assets, and extensions to, enhancements to,
or replacement of existing assets.
Contributions received towards the cost of property, plant
and equipment are included in payables as deferred income
and credited on a straight-line basis to the income statement
over the estimated economic useful lives of the assets to
which they relate.
No depreciation is provided on freehold land and assets in
the course of construction.
Other property, plant and equipment are depreciated,
principally on a straight-line basis, at rates estimated to write
off their book values over their estimated useful economic
lives. In assessing estimated useful economic lives, which
are reviewed on a regular basis, consideration is given to
any contractual arrangements and operational requirements
relatin
g
to particular assets. Unless otherwise determined by
operational requirements, the depreciation periods for the
principal categories of property, plant and equipment are, in
general, as shown in the table below:
Depreciation of wireless infrastructure ceased on the
classification of our wireless infrastructure operations as
businesses held for sale in 2006/07.
Depreciation periods Years
Freehold and leasehold buildings up to 65
Plant and machiner
y
Electricit
y
transmission
p
lant 15 to 60
Electricity distribution plant 15 to 60
Electricit
y
g
eneration
p
lant 20 to 40
Interconnector
p
lant 15 to 60
Gas
p
lant
–
mains, services and re
g
ulatin
g
e
q
ui
p
ment 30 to 100
Gas
p
lant
–
stora
g
e40
Gas plant – meters 10 to 33
Wireless infrastructure 20 to 55
Motor vehicles and office e
q
ui
p
ment u
p
to 10