Tiscali 2012 Annual Report Download - page 74

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 74
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this case with the subsidiary, to generate cash flows such as to recover the goodwill allocated to the
unit, is determined on the basis of the economic and financial data concerning the unit to which the
goodwill refers. The development of such data, as well as the determination of an appropriate discount
rate, requires a significant use of estimates
Income taxes
The determination of income tax, in particular with reference to deferred taxes, involves the use of
estimates and assumptions to a significant extent. Deferred tax assets, arising from timing differences
and/or previous losses, are recognised to the extent that it is probable that taxable profits will be
available in the future against which deductible timing differences and/or previous losses can be
utilised. The provisions are based on taxable income likely to be generated in light of the approved
business plans. Such assets and liabilities are not recognised if the timing differences derive from
goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in transactions that affect neither the accounting result nor taxable income. The book value of
deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer likely that sufficient taxable income will be available to allow all or part of the assets to be
recovered.
Provisions relating to employees
The provisions associated with employees, and in particular the Provisions for staff severance
indemnities, are determined based on actuarial assumptions. The changes in these assumptions could
have significant effects on these provisions.
Receivable write-down provisions
The recoverability of the receivables is assessed taking into account the risk of not collecting them,
their ageing and the significant losses on receivables in the past for similar receivables.
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.
Equity investments
Impairment testing, with particular regard to equity investments, is performed annually as indicated
under “Impairment of assets”. The ability of each unit (investment) to produce cash flows sufficient to
recover the value recorded in the financial statements is determined on the basis of forecast economic
and financial data of the company concerned or any subsidiaries. The development of such data, as
well as the determination of an appropriate discount rate, requires a significant use of estimates
Fair value calculation
Depending on the instrument or financial statements item to be estimated, the directors identify the
most suitable method, by taking into consideration objective market data as much as possible. In
absence of market values, that is, quotations, estimating techniques are used, with reference to the
ones which are most commonly used.
Accounting standards, amendments and interpretations effective from 1 January 2012
As from 1 January 2012, the following new standards and interpretations were issued, as listed below: