Tiscali 2009 Annual Report Download - page 166

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The cost is the fair value of the stock options at the date of allocation, and for accounting purposes, it follows
the rules fixed by “IFRS 2 – Payments based on shares”; the cost is reported in the income statement with
countervalue relating directly to the shareholders’ equity.
Provisions for risks and charges
Provisions for risks and charges relating to potential legal and tax liabilities are established following
estimates performed by directors on the basis of judgements developed by the Group legal and tax advisors,
concerning the charges that are reasonably deemed to be incurred in order to settle the obligation. If in
relation to the final result of such judgements the Group is called upon to fulfil an obligation for a sum other
than that estimated, the related effects are reflected in the income statement.
Treasury Shares
Treasury shares are entered as a deduction from net assets.
Revenue recognition
Revenues are recognised to the extent that it is probable that financial profits will flow to Tiscali S.p.A. and
their amount can be reasonably estimated; they are represented net of discounts, allowances and returns.
Income for services provided are entered on the income statement with reference to the stage of completion
of the service and only when the result of the service can be reasonably assessed.
Financial income and charges
Interest received and paid is recognised using the actual interest method.
Taxes
Income tax expense for the year includes the tax currently payable and deferred tax.
The tax currently payable is based on taxable income for the year. Taxable income differs from the result
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it also excludes items that are never taxable or deductible. Liability for current
tax is calculated using tax rates applicable at the balance sheet date.
Critical decisions in applying accounting standards and in the use of estimates
In the process of applying the accounting standards disclosed in the previous section, Tiscali’s directors
made some significant decisions in view of the recognition of amounts in the financial statements. The
directors’ decisions are based on historical experience as well as on expectations associated with the
realisation of future events and considered reasonable under the circumstances.
The evaluation of recoverability of the main asset items is based on the estimate of residual and financial
flows that the Group believes it will be able to generate in the future. As more amply explained in the note
on “Assessment of corporate continuity”, the achievement of the results stated in the Reorganisation and
Financial Plan taken as reference for that assessment is subject to the achievement of the forecasts and the
assumptions set out therein, partly also outside the control of the Directors and the Group Management, and
Tiscali S.p.A. Accounting Statements and Explanatory Notes