Vodafone 1997 Annual Report Download - page 42

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Vodafone Group Plc Annual Report & Accounts for the year ended 31 March 1997
period of benefit. The Group's equity in earnings of the associated undertakings is reduced by the
amortisation of such goodwill.
Marketable securities
Under UK GAAP, quoted investments held as fixed asset investments are carried at cost. Under US
GAAP, they are classified as available-for-sale securities and are valued at market price with unrealised
gains and losses excluded from earnings and reported within a separate component of shareholders' equity.
Licence fee amortisation
Under UK GAAP, licence fees are amortised in proportion to the expected usage of the network during
the start up period and then on a straight line basis. Under US GAAP, licence fees are amortised on a
straight line basis from the date of acquisition.
Deferred taxation
Under UK GAAP, deferred taxation is provided at the rates at which the taxation is expected to become
payable. No provision is made for amounts which are not expected to become payable in the foreseeable
future.
Under US GAAP, deferred taxation is provided on all temporary differences under the liability method at
rates at which the taxation would be payable in the relevant future year.
Capitalisation of interest costs
Under UK GAAP, interest on borrowings used to finance the construction of an asset is not required to be
included in the cost of the asset. Under US GAAP, the interest cost on borrowings used to finance the
construction of an asset is capitalised during the period of construction until the date that the asset is
placed in service. Such interest cost is amortised over the estimated useful life of the related asset.
Pension costs
Under both UK GAAP and US GAAP pension costs are provided so as to provide for future pension
liabilities. However, there are differences in the prescribed methods of valuation which give rise to GAAP
adjustments to the pension cost and the pension prepayment.
Proposed dividends
Under UK GAAP, dividends are included in the financial statements when recommended by the Board of
directors to the shareholders. Under US GAAP, dividends are not included in the financial statements
until declared by the Board of directors.
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