Vodafone 1998 Annual Report Download - page 80

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Statement Of Accounting Policies
The consolidated financial statements include investments in associated undertakings using the equity method of accounting.
An associated undertaking is a company in which the Group owns a material share of the equity and, in the opinion of the
directors, can exercise significant influence in its management. The profit and loss account includes the Group's share of the
operating profit or loss, exceptional items, interest income or expense and attributable taxation of those companies. The
balance sheet shows the Group's share of the net assets or liabilities, excluding goodwill, of those companies and loans
advanced to those companies.
Other investments, held as fixed assets, comprise equity shareholdings, partnership interests and long term loans. They are
stated at cost less provision for any permanent diminution in value. Dividend income is recognised upon receipt and interest
when receivable.
Stocks
Stocks are valued at the lower of cost and estimated net realisable value.
Deferred taxation
Provision is made for deferred taxation only where there is a reasonable probability that a liability or asset will crystallise in
the foreseeable future.
No provision is made for any tax liability which may arise if undistributed profits of certain international subsidiary and
associated undertakings are remitted to the UK, except in respect of planned remittances.
Leases
Rental costs under operating leases are charged to the profit and loss account in equal annual amounts over the periods of
the leases.
Assets acquired under finance leases which transfer substantially all the rights and obligations of ownership are accounted
for as though purchased outright. The fair value of the asset at the inception of the lease is included in tangible fixed assets
and the capital element of the leasing commitment included in creditors. Finance charges are calculated on an actuarial basis
and are allocated over each lease to produce a constant rate of charge on the outstanding balance.
Lease obligations which are satisfied by cash and other assets deposited with third parties are set-off against those assets in
the Group's balance sheet.
http://www.vodafone.com/download/investor/reports/annual98/finance/statement.html (3 of 3)29/03/2007 23:11:10