Telstra 2007 Annual Report Download - page 169

Telstra Corporation Limited and controlled entities
166
Notes to the Financial Statements (continued)
(a) As at 30 June 2007, the Telstra Group had software assets under
development amounting to $1,255 million (2006: $352 million) and
the Telstra Entity had soft ware assets under development amounting
to $1,106 million (2006: $296 million). As these assets were not
installed and ready for use there is no amortisation being charged on
the amounts.
(b) We do not currently amortise the cost of our mastheads as they
have been assessed t o have an indefinit e useful life. We do not expect
there to be a foreseeable limit to the period over which the mastheads
are expected to generat e net cash inflows and, based on industry
experience and current information, it is extremely rare for leading
mastheads to become commercially or technically obsolete. During
fiscal 2007 we recorded an impairment loss of $110 million against the
mastheads. Despite this impairment we continue to assess the
mastheads as having an indefinite useful life. Refer to note 25 for
further details regarding impairment .
(c) During fiscal 2005, we entered into an arrangement with our jointly
controlled entity, Reach Ltd (Reach), and our co-shareholder PCCW,
whereby Reach's international cable capacity was allocated between
us and PCCW under an indefeasible right of use (IRU) agreement ,
including committed capital expenditure for the period unt il 2022.
The IRU is amortised over the contract periods for the capacity on the
various international cable systems, which range from 5 to 22 years.
The Telstra Entity has recorded the IRU within deferred expenditure.
For the Telstra Group, the IRU is deemed to be an ext ension of our
investment in Reach. The IRU has a carrying value of $nil in the
consolidated financial statements due to the recognition of equity
accounted losses in Reach.
(d) Amortisation expense is included in depreciation and amortisation
expense in the income statement, with the exception of items of
deferred expenditure which are expensed to the relevant line of the
income statement. The majorit y of the deferred expenditure relates
to the deferral of basic access installat ion costs, which are amortised
to goods and services purchased in the income statement.
15. Intangible assets (continued)
Telstra Group Telstra Entity
As at 30 June As at 30 June
2007 2006 2007 2006
$m $m $m $m
Deferred expenditure (c)
Opening cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,589 1,272 1,841 1,533
- additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 317 354 315
- amounts written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30) -(30) -
- other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14) -(14) (7)
Closing cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,901 1,589 2,151 1,841
Opening accumulated amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,007) (652) (1,022) (655)
- amortisation expense (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (367) (355) (391) (367)
- amounts written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-9-
Closing accumulated amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,365) (1,007) (1,404) (1,022)
Closing net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536 582 747 819