Tiscali 2013 Annual Report Download - page 72

Annual financial report as at 31 December 2013
Date
File Name
Status
Page
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Annual Report as at 31
December 2013
72
Internally generated intangible assets arising from costs supported for the development of applications
software under Group control and directly associated with the production of services, in particular with
regard to ‘technological platforms’ for access and management of the Tiscali network, are recognised
if:
the following general conditions indicated by IAS 38 are observed for the capitalization of
the intangible assets: (a) the asset created can be identified; (b) it is likely that the asset
created will generate future economic benefits; (c) the development cost of the asset can
be reliably gauged;
the Group can demonstrate the technical possibility of completing the intangible asset so as
to make it available for use or for sale, its intention to complete said asset so as to use or
sell it, the ways in which it will generate probable future economic benefits, the availability
of technical, financial or other resources for completing its development and its ability to
reliably assess the cost attributable to the asset during its development..
During the development period, the asset is reviewed annually for the purpose of revealing any
impairment losses. Subsequent to initial statement, the development costs are valued at the
decreased cost of the amortisation and any other accumulated loss. Amortisation of the asset
commences when the development has been completed and the asset is available for use. The cost is
amortised with reference to the period when it is expected that the related project will generate
revenues for the Group.
Costs associated with the development and the ordinary maintenance of software not meeting the
above mentioned requirements, and with research costs, are charged in full to the income statement in
the period in which they are incurred.
Broadband service activation costs
Acquisition and activation costs for customers were amortised over a period of 36 months.
IRU
The IRU are classified in the category “concessions and similar rights” and comprise costs sustained
for the purchase of long-term rights of use for the fibre optics network, i.e. the ‘transmission capacity’
and related charges. Amortisation is calculated using the straight-line method, either over the
remaining life of the agreement or the estimated utilisation period of the right, whichever is the shorter.
The amortisation period varies on average between 12 and 15 years.
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.