Tiscali 2007 Annual Report Download - page 124

the book value is increased to the new estimated recoverable
value, up to a maximum of the value recognised initially.
2.3 Assets held for sales and discontinued operations
Assets due for disposal in relation to equity investments in non-
strategic subsidiaries held for sale as required by IFRS 5 - As-
sets Held for Sale and Discontinued Operations (applicable
from 1 January 2004), are classified under a specific item in
the balance sheet and are stated at the lower of the asset’s pre-
vious book value and market value, less any sales costs. The
assets (related to equity investments) are thus classified if it is
estimated that their book value will be recovered by disposal
rather than by continued use. This condition is observed only
when the sale is highly probable, the asset (or investment) is
available for immediate sale in its present condition and the
Board of Directors of the parent company is committed to the
sale, completion of which should be expected within one year
from the date of classification.
2.4 Foreign currency transactions
Sums receivable and payable in foreign currency are recorded
at the exchange rate valid at the end of the year, and related gains
or losses from conversion are credited or charged to the income
statement under “Exchange gains and losses”. There are no tan-
gible assets, intangible assets or equity investments recognised
at cost in foreign currency. After closing of the financial period,
there were no significant changes in the reference exchange
rates used in the preparation of these statements.
2.5 Other intangible assets
Concessions, licenses and similar rights
Acquired computer software licenses are capitalised and in-
cluded among intangible assets at the purchase cost and are
amortised on a straight-line basis over their estimated useful lives.
2.6 Properties, plant and machinery
All property, plant and machinery is shown at purchase or pro-
duction cost, including accessory charges directly attributa-
ble to purchase of the items, less accumulated depreciation
and impairment. No revaluation is provided for such tangible
assets.
Depreciation is calculated using the straight-line method on
the cost of each asset less the relevant residual value, if any,
over its estimated useful life, as follows:
Properties 17%
Plant 12-20%
Equipment 12-25%
Routine maintenance expenses are charged to the income
statement in full, in the financial year in which the costs were
incurred, while maintenance expenses of an incremental na-
ture are attributed to relevant assets and are depreciated over
the residual useful life.
Upgrade costs on third-party assets under operating lease agree-
ments are capitalised, posted under the relevant line of tangible
assets and are amortised over either the estimated useful life of
the asset or the remaining term of the lease, whichever is shorter.
Gains and losses arising on disposals of items of property, plant
and machinery are calculated as the difference between sales
revenue and net carrying value and are recognised to the income
statement for the year.
2.7 Impairment of assets
The book value of Equity investments, Other intangible assets
and Properties, plant and machinery is tested for impairment
whenever events or changes in circumstance indicate that the
book value may be impaired. The assets in question are tested
annually or more frequently if there is any indication that those
assets have suffered impairment. If any such indication exists
the recoverable amount of the asset is estimated in order to
determine the extent of the impairment. Where it is not possi-
ble to estimate the recoverable amount of an individual asset,
the Company estimates the recoverable amount of the Cash
Generating Unit (CGU) to which the asset belongs. The recov-
erable amount is the higher between the ‘fair value’ less sales
costs and its utilisation value. When assessing utilisation value,
the estimated future cash flows are discounted to their pres-
ent value using a pre-tax discount rate that reflects current
market assessment on the value of money and the risks spe-
cific to the asset.
If the recoverable amount of an asset (or cash generating unit)
is estimated to be less than its book value, the latter is written
down to its recoverable amount. The relevant impairment is
booked to the income statement under writedowns. If the rea-
sons for impairment are considered to no longer apply in the
current year the book value of the asset (or cash-generating
unit) is increased to the revised estimate of its recoverable
amount, but not beyond the book value that would have been
determined had no impairment been recognised for the asset
in previous years. An impairment reversal is booked to the in-
come statement.
The accounting standards adopted for specific assets and li-
abilities are disclosed below.
Other financial assets
Other financial assets are valued, consistently with IAS 39 pro-
visions for financial assets ‘available for sale’, at fair value or
alternatively at cost whenever fair value cannot be reliably cal-
culated. Gains and losses from changes in fair value are di-
rectly booked to equity until the security is disposed of or is
impaired, at which time the cumulative gain or loss previously
TISCALI S.P.A. – SINANCIAL STATEMENTS AT 31 DECEMBER 2007
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