Tiscali 2009 Annual Report Download - page 169

Tiscali Group: Annual Report 2009
168
provides general guidelines for accounting for customer loyalty schemes into community law This
interpretation is denoted by the following items:
- Prize points offered to customers are considered as an item to be identified separately form the
original sales of products or services with which they are associated and thus represent a right that a
customer has implicitly paid for;
- The part of the consideration allocated to prize points must be valued by reference to their fair
value (that is, to the value for which the prize points could have been sold separately) and accounted
for as deferred revenues up to the moment in which the company meets its commitment.
The adoption of this principle is not applicable to the Tiscali Group as no customer loyalty programmes are operated.
IFRS Improvements
On the 23 January 2009, EC regulation no. 70-2009 was published which incorporated the amendments
made to International Financial Reporting Standards (IFRS) into community law. The following amendments
to the principles, which came into force on the 1 January 2009, are highlighted:
• IAS 16 (Properties, plant and machinery): The amendment provides some extra detail on the
classification and accounting treatment to be adopted on the part of a body that in the course of its own
ordinary business sales property plant and machinery items owned for hire to third parties;
• IAS 19 (Employee benefits) The amendment introduced, to be applied in the future, clarifies the
behaviour to be adopted in the case of variations in benefits to staff, defines the terms for noting the
costs/revenues relating to the labour services provided and details the definition of the short term and
long term benefits.
• IAS 28 (Shareholdings in associates): The amendment established that, in the case of shareholding
valued using the net asset approach, any loss of value must not be allocated to single assets (and in
particular to any goodwill) that make up the value borne by the shareholding, but to the value of the
subsidiary overall. Thus, in the present of conditions for a later recovery of value, that recovery must
be fully recognized.
• IAS 29 (Account reporting in hyperinflated economies): These are amendments to a principle currently
not applicable to the Group;
• IAS 38 (Intangible assets): The amendment provides for the recognition in the income statement of
promotional and advertising costs. It established that, in the case in which the company bears charges
that have future income benefits without entering intangible assets, these must be attributed to an
income account at the time in which the company itself ahs the right to access the asset, if it involves
the purchase of assets, on in which the service is rendered, if it involves the purchase of services.
Furthermore the principle was amended to clarify in which cases it is possible to adopt the “units
produced approach” for depreciating fixed useful life intangible assets;
• IAS 39 (Financial instruments: reporting and valuation): The amendment clarifies how the new rate
of actual return must be calculated for a financial instrument at the end of a fair value hedge; it also
specifies the cases in which it is possible to reclass a derivative instrument within or outside the class
of “fair value through the income account”;
Furthermore IFRS 5 (Non current assets held for sale and transferred operating assets) was amended: The
amendment provides that if a body carries out a programme of sales that includes the loss of control if a
subsidiary it must classify all the assets and liabilities in the said subsidiary as held for sale, regardless of the
fact that, after the sale, it might retain a minority interest in the former subsidiary. The new version of IFRS
5 came into force on the 1 January 2010.
It is expected that the application of the “IFRS improvements” referred to above will not have a considerable
impact on the consolidated Group financial statements.