Vodafone 2003 Annual Report Download - page 80

Vodafone Group Plc Annual Report & Accounts and Form 20-F 2003
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Continued
2. Accounting policies continued
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation.
Depreciation is not provided on freehold land. The cost of other tangible fixed assets is written off, from the time they are brought into use, by equal
instalments over their expected useful lives as follows:
Freehold buildings 25-50 years
Leasehold premises the term of the lease
Motor vehicles 4 years
Computers and software 3-5 years
Equipment, fixtures and fittings 5-10 years
The cost of tangible fixed assets includes directly attributable incremental costs incurred in their acquisition and installation.
Investments
The Consolidated Financial Statements include investments in associated undertakings using the equity method of accounting. An associated undertaking is
an entity in which the Group has a participating interest and, in the opinion of the directors, can exercise significant influence over its operational and
financial policies. 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 entities. The balance sheet shows the Group’s share of the net assets or liabilities of those entities, together with loans
advanced and attributed goodwill.
The Consolidated Financial Statements include investments in joint ventures using the gross equity method of accounting. A joint venture is an entity in which
the Group has a long term interest and exercises joint control. Under the gross equity method, a form of the equity method of accounting, the Group’s share
of the aggregate gross assets and liabilities underlying the investment in the joint venture is included in the balance sheet and the Group’s share of the
turnover of the joint venture is disclosed in the profit and loss account.
Other investments, held as fixed assets, comprise equity shareholdings and other interests. They are stated at cost less provision for any impairment.
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
Deferred tax is provided in full on timing differences that exist at the balance sheet date and that result in an obligation to pay more tax, or a right to pay less
tax in the future. The deferred tax is measured at the rate expected to apply in the periods in which the timing differences are expected to reverse, based on
the tax rates and laws that are enacted or substantially enacted at the balance sheet date. Timing differences arise from the inclusion of items of income and
expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax is not provided on
timing differences arising from the revaluation of fixed assets where there is no binding commitment to sell the asset. Deferred tax assets are recognised to
the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
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.