Tiscali 2012 Annual Report Download - page 69

Annual financial report as at 31 December 2012
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Date File Name Status Page
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Annual Report as at 31
December 2012 69
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Property, plant and equipment
Property, plant and equipment are stated at purchase or production cost, including accessory charges,
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 minimum and maximum depreciation rates applied during 2011 are those indicated below:
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.
Gains and losses arising on disposals of items of property, plant and equipment 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 financial leases if all the risks and benefits of ownership are transferred to the
lessee. All other leases are considered operating leases.
Assets held under financial leases are recognised as Group assets at their fair value at the time of
stipulation of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the balance sheet as a financial lease obligation,
under financial payables. Lease payments are divided into their capital and interest elements.
Financial charges are directly booked to the income statement for the year.
Assets held under financial leases are depreciated using the straight-line method based on their
estimated useful life, in the same manner as owned assets, or over the lease term if shorter and only if
there is no reasonable certainty of redeeming the asset considering the lease expiry terms.
Moreover, as for asset disposal and backdating operations on the basis of financial lease contracts,
the accomplished capital gains are deferred for the duration of contracts or the residual life of the
asset (if lower).
Operating lease payments are booked to the income statement as costs on an accruals basis.
Impairment of assets
Goodwill and balance sheet assets are subject to an impairment test each year or more frequently if
there is indication of impairment. The book value of intangible assets with an unspecified useful life
and of property, plant and equipment, is checked each time there is indication that the asset has
suffered impairment. If any such indication exists, the recoverable amount of the asset is estimated in