Tiscali 2009 Annual Report Download - page 93

Tiscali Group: Annual Report 2009
92
This change constitutes a case of changes in accounting estimates as defined and described in sections 32-
40 of IAS 8. As laid down by the international accounting standard, the company determined the impact of
the change, starting from 1 July 2009, with regards to all the financial elements referring to the accounting
of costs and revenues for the acquisition and activation of each ADSL subscriber. This impact is described
in the explanatory notes in the section on these financial components.
Properties, plant and machinery
Properties, plant and machinery are stated at purchase or production cost, including accessory charges
directly attributable to the purchase of the items, less accumulated depreciation and any write-downs for
impairment. No revaluations have been 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. Land, including that pertaining to buildings, is not depreciated.
The depreciation rates are reviewed annually and are amended if the current estimated useful life differs
from that estimated previously. The effects of these changes are reflected in the income statement on a
forecast basis.
The depreciation rates adopted for IP and Ethernet network equipment (such as routers and L3/L2 switches),
representing the most significant plant category, were calculated on the basis of a report drawn up by an
independent consultant.
The minimum and maximum depreciation rates applied during 2008 and 2009 are those indicated below:
Land and Buildings 3%
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 nature are allocated to relevant
assets and are depreciated over the residual useful life.
Leasehold maintenance costs 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 book value and are booked to the income statement for the year.
Assets held under finance lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and benefits of ownership to the lessee. All other leases are considered operating leases.
Assets held under finance leases are recognised as Group assets at their fair value at the time of stipulation