National Grid 2008 Annual Report Download - page 635

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 59475
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: 108
Description: EXHIBIT 15.1
0/2304.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/304/2*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 59475
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: 108 Description: EXHIBIT 15.1
0/2304.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/304/2*
Table of Contents
116
Accountin
g
p
olicies continued
National Grid plc
G. Impairment of assets
Impairments of assets are calculated as the difference
between the carrying value of the asset and its recoverable
amount, if lower. Where such an asset does not generate
cash flows that are independent from other assets, the
recoverable amount of the cash-
g
eneratin
g
unit to which that
asset belongs is estimated.
Recoverable amount is defined as the higher of fair value
less costs to sell and estimated value in use at the date the
impairment review is undertaken.
Value in use represents the present value of expected future
cash flows, discounted using a pre-tax discount rate that
reflects current market assessments of the time value of
money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
Goodwill is tested for impairment at least annually.
Otherwise, tests for impairment are carried out only if there
is some indication that the carrying value of the assets may
have been impaired.
Material impairments are recognised in the income
statement and are disclosed separately.
H. Taxation
Current tax
Current tax assets and liabilities for the current and prior
periods are measured at the amounts expected to be
recovered from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amounts are those
that are enacted or substantively enacted by the balance
sheet date.
Deferred tax and investment tax credits
Deferred tax is provided using the balance sheet liability
method and is reco
g
nised on temporary differences between
the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit.
Deferred tax liabilities are
g
enerally reco
g
nised on all taxable
temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial
recognition of goodwill or from the initial recognition (other
than a business combination) of other assets and liabilities in
a transaction that affects neither the accounting profits nor
the taxable profits.
Deferred tax liabilities are recognised on taxable temporary
differences arising on investments in subsidiaries and jointly
controlled entities, except where the Company is able to
control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset
is realised, based on the tax rates (and tax laws) that have
been enacted or substantively enacted by the balance sheet
date. Deferred tax is charged or credited to the income
statement, except where it relates to items charged or
credited directly to equity, in which case the deferred tax is
also dealt with in equity.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the deferred tax asset to be
recovered. Unrecognised deferred tax assets are
reassessed at each balance sheet date and are recognised
to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities, and when they relate to income taxes
levied by the same taxation authority and the Company and
its subsidiaries intend to settle their current tax assets and
liabilities on a net basis.
Investment tax credits are amortised over the economic life
of the assets that give rise to the credits.
I. Discontinued operations, assets and
businesses held for sale
Cash flows and operations that relate to a major component
of the business or geographical region that has been sold or
is classified as held for sale are shown separately from
continuing operations.
Assets and businesses classified as held for sale are
measured at the lower of carryin
g
amount and fair value less
costs to sell. No depreciation is charged on assets and
businesses classified as held for sale.
Assets and businesses are classified as held for sale if their
carrying amount will be recovered or settled principally
through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is
highly probable and the assets or businesses are available
for immediate sale in their present condition. Management
must be committed to the sale, which should be expected to
qualify for recognition as a completed sale within one year
from the date of classification.
Finance income or costs are included in discontinued
operations only in respect of financial assets or liabilities
classified as held for sale or derecognised on sale.
J. Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where
applicable, direct labour costs as well as those overheads
that have been incurred in bringing the inventories to their
present location and condition.
K. Decommissioning and
environmental costs
Provision is made for decommissioning and environmental
costs, based on future estimated expenditures, discounted to
present values. Where appropriate, the establishment of a
provision is recorded as part of the original cost of the
related property, plant and equipment.
Changes in the provision arising from revised estimates or
discount rates or changes in the expected timing of
expenditures that relate to property, plant and equipment are
recorded as adjustments to their carrying value and
depreciated prospectively over their remaining estimated
useful economic lives; otherwise such changes are
recognised in the income statement.