Tiscali 2003 Annual Report Download - page 104

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drawn up based on assumptions that take into account the information currently available on market trends. Specifically, the
Company’s business plan points to the generation of cash flow from the second half of 2004, and the achievement of a net profit in 2005.
a2) Other general criteria
For the purposes of accounting entries, the economic substance of transactions prevails over their legal form. Investments are the-
refore booked at the time of payment. Profits are included only if they are recorded within the period under review, while provi-
sion is made for risks and losses that may come to light at a later date. Miscellaneous items included under single accounting
entries have been valued separately. Assets destined for long-term use have been listed under non-current assets.
b) Write-downs and write-backs
The value of tangible and intangible assets whose useful life is limited over time are written down respectively through deprecia-
tion and amortisation charges. These tangible and intangible assets, and any other assets, are written down each time a perma-
nent loss of value is noted; however if the reasons for the loss of value are considered to no longer apply, then the original value
is re-established. The method for calculating depreciation and amortisation charges is explained separately in these notes.
c) Write-ups
To date, no write-ups have been made.
d) Exceptions
No exceptions to the accounting policies set out in the legislation pertaining to accounting statements have been made in this, or
any other financial year.
Key principles and criteria
e) Intangible assets
Start-up and expansion costs are entered under the appropriate accounting entry on the assets side of the balance sheet, and are
amortised for a period not exceeding five years starting from the financial year in which the costs were incurred.
Research, development and advertising costs are as a rule debited to the profit and loss account of the financial year in which
they were incurred. Exception is made for expenditure on the development of new products, whose R&D and advertising costs are
posted under the appropriate line item under “assets” and amortised over two years starting from the financial year in which they
were incurred, in consideration of the time taken to recoup such costs. Please note that advertising costs incurred in the first half
of the year in relation to the launch of new broadband products and services are recorded as capitalised costs.
Industrial patent rights and intellectual property rights are recorded at their acquisition cost and amortised using the straight-line
method in accordance with the period of use established by the agreement. Under no circumstances shall the amortisation period
exceed five years from the financial year in which the costs were incurred.
Concessions, licenses, trademarks and similar rights are also recorded at their acquisition cost and amortised using the straight-
line method in accordance with the period of use established by the agreement. The amortisation period shall not exceed five years
from the financial year in which the costs were incurred, unless other arrangements have been made. In particular, IRUs may be
amortised over 15 years, depending on the length of the concession.
Maintenance and upgrade costs on third-party assets are listed under “other” and are depreciated over either the estimated use-
ful life of the asset using the straight-line method, or over the residual period of the agreement, whichever is the shorter.