Tiscali 2009 Annual Report Download - page 164

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In application of IAS 36, the value of equity investments recognised at cost is reduced if there is impairment
or if circumstances emerge that indicate that said cost is irrecoverable. If the impairment is discovered to
no longer apply or is reduced, the book value is increased to the new estimated recoverable value, up to a
maximum of the value recognised initially.
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 possible 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 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 written 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-generating unit) is increased to the revised estimate of its recoverable
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.
Other financial assets
Other financial assets are valued, consistently with IAS 39 provisions for financial assets ‘available for sale’,
at fair value or alternatively at cost whenever fair value cannot be reliably calculated. Gains and losses from
changes in fair value are directly booked to equity until the security is disposed of or is impaired, at which
time the cumulative gain or loss previously booked to equity is included in the income statement for the
period. The original value is re-recognised in the following financial year if the reasons for write-down are
considered to no longer apply.
Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate in force at the time of the transaction.
Monetary assets and liabilities stated in foreign currency are converted at the exchange rate in force at the
financial statement reference date. Exchange rate differences generated by the extinguishment of currency
postings or by their conversion at rates other than those at their initial noting in the year or at the end of the
previous financial year are entered in the profit and loss account.
Financing and loans
Tiscali S.p.A.’s loans are set out in the “other non current financial assets”, ‘loans to customers”, “other
loans and sundry current assets” and “other current financial assets” items and are valued, if they have a
fixed maturity, at the depreciated cost, using the actual interest rate method. When financial assets have
no fixed expiry, they are estimated at the acquisition cost. Estimates are regularly carried out with the aim
of making sure whether there is objective evidence that a financial asset or a group of assets have been
Tiscali S.p.A. Accounting Statements and Explanatory Notes