Tiscali 2007 Annual Report Download - page 74

CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES AT 31 DECEMBER 2007
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the same manner as owned assets, or over the lease term if
shorter and only if there is no reasonable certainty of redeem-
ing the asset considering the lease expiry terms.
Moreover, as for asset disposal and backdating operations on
the basis of financial lease contracts, the accomplished cap-
ital gains are deferred for the duration of contracts or the resid-
ual life of the asset (if lower).
Operating lease payments are booked to the income state-
ment as costs on an accruals basis.
competenza temporale.
2.9 Impairment of assets
The book value of Other intangible assets and of Properties,
plant and machinery are tested for impairment whenever
events or changes in circumstance indicate that the book
value may not be recoverable. Intangible assets with unlimit-
ed useful life (goodwill) are tested annually or more frequent-
ly 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 possible to estimate the recoverable amount
of an individual asset, the Group estimates the recoverable
amount of the cash Generating Unit (CGU) to which the asset
belongs. The recoverable amount is the higher between the
‘fair value’ less sales costs and its utilisation value. When
assessing the utilisation value, the estimated future cash flows
are discounted to their present value using a pre-tax discount
rate that reflects current market assessments on the value of
money and the risks specific 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 writ-
ten down to its recoverable amount. The relevant impairment
is booked to the income statement under write-downs. If the
reasons for impairment are considered to no longer apply in
the current year, the book value of the asset (or cash-gener-
ating unit) is increased to the revised estimate of its recover-
able amount, but not beyond the net 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 income statement.
2.10 Inventories
Inventories are stated at the lower of cost and net realisable
value. Considering the circumstances and characteristics of
the Group’s assets, the cost refers to direct materials.
The cost is calculated by using the average cost method. The
net realisable value is the selling price less the costs consid-
ered necessary for achieving the sale.
2.11 Financial instruments
The financial instruments held by the Group are included in the
following financial statements items.
Equity investments items and other non-current financial assets
include the equity investments in non-consolidated companies
and other non-current financial assets which the Group intends
to keep until expiry, and include the positive fair value of deriv-
ative financial instruments.
The current financial assets include trading receivables and the
other current financial assets (guarantee deposits, essentially),
as well as cash and cash equivalents.
In particular, the item Cash and Cash Equivalents includes
bank deposits.
Financial liabilities relate to financial payables, including payables
due to financial leases, and to other financial liabilities (includ-
ing the possibly negative fair value of derivative financial instru-
ments), trading payables, and other payables.
Assessment
Equity investments in non-consolidated companies included
in the non-current financial assets are recorded pursuant to
what has been described in the previous paragraph, Consoli-
dation standards. The non-current financial assets different
from equity investments, in the same way as current financial
assets and financial liabilities, are recorded pursuant to IAS
39 – Financial instruments: surveying and assessment.
The financial assets held with the aim of keeping them until
expiry are recorded on the basis of the settlement date; at the
time of their first recording in the financial statements, they
are estimated at acquisition cost, including transaction acces-
sory costs. After the first surveying, the financial instruments
available for sale and the negotiation instruments are assessed
at fair value. If the market price is not available, the fair value
of the financial instruments available for sale is fixed by means
of the most adequate estimating techniques, such as the analy-
sis of updated cash flows, carried out with the market infor-
mation available at the financial statements date.
The profits and the losses from financial assets available for
sale are estimated directly on the shareholders’ equity, until
the time in which the financial asset is sold or devalued; at the
time when the asset is sold, the accumulated profits or loss-
es, including the ones previously assigned to the sharehold-
ers’ equity, are included in the income statement for the peri-
od; at the time when the asset is devalued, the accumulated
losses are included in the income statement. The profits and
the losses generated by fair value changes in the financial
instruments, classified as held for negotiation, are recorded in
the income statement of the period.
The loans and the receivables which the Group does not hold
with negotiation purposes (loans and receivables originated
during the typical activity), the securities held with the intent
of keeping them in portfolio until expiry, and all the financial
assets for which there are no quotations in an active market,
and whose fair values cannot be fixed in a reliable way, are