Tiscali 2014 Annual Report Download - page 82

Annual financial report as at 31 December 2014
Date
File Name
Status
Page
-
Annual Report as at 31
December 2014
82
Losses in value in assets (Impairment)
Goodwill and financial statement 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 machinery, 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 order to determine the extent of the impairment. Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the Cash
Generating Unit (CGU) to which the asset belongs. The recoverable amount is the higher between the
‘fair value’ less sales costs and its utilisation value. When assessing the utilisation value, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments on the value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its book
value, the latter is written down to its recoverable amount. The relevant impairment is booked to the
income statement under write-downs. If the reasons for impairment are considered to no longer apply
in the current year, the book value of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but not beyond the net book value that would have been
determined had no impairment been recognised for the asset in previous years. An impairment
reversal is booked to the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Considering the circumstances and
characteristics of the Group’s assets, the cost refers to direct materials. The cost is calculated by using
the average cost method. The net realisable value is the selling price less the costs considered
necessary for achieving the sale.
Financial instruments
Loans and receivables
Group receivables are stated in the items “other non-current financial assets”, “receivables from
customers”, “other receivables and other current assets” and “other current financial assets”, and
include guarantee deposits, trade receivables, and receivables from third parties generated as part of
core business activities.
If they have a fixed maturity, they are stated at amortised cost, using the effective interest rate method.
When financial assets have no fixed expiry, they are estimated at the acquisition cost. Receivables
maturing beyond 12 months, unprofitable receivables, and receivables accruing interest at lower rates
with respect to the market, are updated by using market rates.
Estimates are regularly carried out with the aim of making sure whether there is objective evidence
that a financial asset or a group of assets have been subject to impairment. If there is objective
evidence, the impairment must be recorded as a cost in the income statement for the period.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, on-demand and short-term deposits, in the latter
case with an original maturity envisaged of no more than three months.