Tiscali 2014 Annual Report Download - page 81

Annual financial report as at 31 December 2014
Date
File Name
Status
Page
-
Annual Report as at 31
December 2014
81
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.
Properties, plant and machinery
Properties, plant and machinery 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 2014 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 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 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 statement of financial position 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.