BT 2000 Annual Report Download - page 61

Accounting policies
60 Annual report and Form 20-F
Vll Tangible ®xed assets
Tangible ¢xed assets are stated at historical cost
less depreciation.
(a) Cost
Cost in the case of network services includes contractors'
charges and payments on account, materials, direct labour
and directly attributable overheads.
(b) Depreciation
Depreciation is provided on tangible ¢xed assets on a
straight line basis from the time they are available for use,
so as to write o¡ their costs over their estimated useful
lives taking into account any expected residual values.
No depreciation is provided on freehold land.
The lives assigned to other signi¢cant tangible ¢xed
assets are:
Freehold buildings ± 40 years
Leasehold land and buildings ± Unexpired
portion of lease
or 40 years,
whichever is the
shorter
Transmission equipment:
duct ± 25 years
cable ± 3 to 25 years
radio and repeater equipment ± 2 to 25 years
Exchange equipment ± 2 to 13 years
Computers and of®ce equipment ± 2 to 6 years
Payphones, other network equipment,
motor vehicles and cableships ± 2 to 20 years
VIII Fixed asset investments
Investments in subsidiary undertakings, associates and
joint ventures are stated in the balance sheet of the
company at cost less amounts written o¡. Amounts
denominated in foreign currency are translated into
sterling at year-end exchange rates.
Investments in associates and joint ventures are stated
in the group balance sheet at the group's share of their net
assets, together with any attributable unamortised goodwill
on acquisitions arising on or after 1 April 1998.
The group's share of pro¢ts less losses of associates
and joint ventures is included in the group pro¢t and
loss account.
Investments in other participating interests and other
investments are stated at cost less amounts written o¡.
IX Stocks
Stocks mainly comprise items of equipment, held for sale
or rental, consumable items and work in progress on long-
term contracts.
Equipment held and consumable items are stated at
the lower of cost and estimated net realisable value, after
provisions for obsolescence.
Work in progress on long-term contracts is stated at
cost, after deducting payments on account, less provisions
for any foreseeable losses.
X Redundancy costs
Redundancy costs arising from periodic reviews of sta¡
levels are charged against pro¢t in the year in which
employees agree to leave the group.
If the most recent actuarial valuation of the group's
pension scheme shows a de¢cit, which exceeds the amount
of provision for pension liabilities in the balance sheet, the
estimated cost of providing incremental pension bene¢ts in
respect of employees leaving the group is charged against
pro¢t in the year in which the employees agree to leave the
group, within redundancy charges.
XI Pension scheme
The group operates a de¢ned bene¢t pension scheme,
which is independent of the group's ¢nances, for the
substantial majority of its employees. Actuarial valuations
of the scheme are carried out as determined by the trustees
at intervals of not more than three years, the rates of
contribution payable and the pension cost being
determined on the advice of the actuaries, having regard to
the results of these valuations. In any intervening years,
the actuaries review the continuing appropriateness of the
contribution rates.
The cost of providing pensions is charged against
pro¢ts over employees' working lives with the group using
the projected unit method. Variations from this regular cost
are allocated on a straight-line basis over the average
remaining service lives of current employees to the extent
that these variations do not relate to the estimated cost
of providing incremental pension bene¢ts in the
circumstances described in X above.
Interest is accounted for on the provision in the
balance sheet which results from di¡erences between
amounts recognised as pension costs and amounts funded.
The regular pension cost, variations from the regular
pension cost, described above, and interest are all charged
within sta¡ costs.