Tiscali 2014 Annual Report Download - page 141

Annual financial report as at 31 December 2014
Date
File Name
Status
Page
-
Annual Report as at 31
December 2014
141
Critical decisions in applying accounting standards and in the use of estimates
In the process of applying the accounting standards disclosed in the previous section, Tiscali’s
directors made some significant decisions in view of the recognition of amounts in the financial
statements. The directors’ decisions are based on historical experience as well as on expectations
associated with the realisation of future events, considered reasonable under the circumstances.
Assessment of whether primary assets reported can be recovered is based on the estimate of income
and financial flows the Group feels it will be able to generate in the future. As more fully described in
the note “Assessment of the business as a going-concern”, achieving the results set forth in the
business and financial plan, used for the assessment, depends on whether the forecasts and
assumptions contained therein are reached. Some of these variables are beyond the control of the
Directors and the Group management, as described in the section “Assessment of the business as a
going-concern and future outlook”.
Accounting estimates and relevant assumptions
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
previously 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 2014
The international accounting standards, the changes to the existing standards and the interpretations,
relevant for the Company, adopted for the first time as from 1 January 2014, are presented below:
IFRS 10 - Consolidated Financial Statements, IAS 27 (2011) - Separate Financial Statements
IFRS 10 introduces one single control model to be applied to all companies, including special purpose
entities. IFRS 10 supersedes the section of IAS 27 - Consolidated and separate financial statements
which regulates the accounting of the consolidated financial statement and SIC-12 - Consolidation –
Special Purpose Vehicles. IFRS 10 changes the definition of control by stating that an investor
controls an investee when it is exposed or has rights to variable returns from its involvement with the