Carphone Warehouse 2009 Annual Report Download - page 52

48 The Carphone Warehouse Group PLC Annual Report 2009
Notes to the Financial Statements – continued
is provided on all property, plant and equipment at rates
calculated to write off the cost, less estimated residual value,
of each asset on a straight-line basis over its expected useful
life from the date it is brought into use, as follows:
Freehold buildings 2-4% per annum
Short leasehold costs 10% or the lease term if less
Network equipment
and Computer hardware 12.5-50% per annum
Fixtures and ttings 20-25% per annum
Motor vehicles 25% per annum
m) Recoverable amount of non-current assets
At each reporting date, the Group assesses whether there is
any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal
estimate of the asset’s recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount, the asset
is considered to be impaired and is written down through an
accelerated amortisation charge to its recoverable amount.
The recoverable amount is the higher of an asset’s or CGU’s
fair value less costs to sell and its value in use, and is
determined for an individual asset, unless the asset does not
generate cash ows that are largely independent of those from
other assets or groups of assets.
n) Investments
Investments, other than subsidiaries and joint ventures and
associates, are initially recognised at cost, being the fair value
of the consideration given plus any transaction costs
associated with the acquisition.
Investments are categorised as available-for-sale and are then
recorded at fair value. Changes in fair value, together with any
related taxation, are taken directly to reserves, and recycled to
the income statement when the investment is sold or
determined to be impaired.
o) Interests in joint ventures and associates
Interests in joint ventures and associates are accounted for
using the equity method. The consolidated income statement
includes the Group’s share of the post-tax prots or losses of
the joint ventures and associates based on their nancial
statements for the year. In the consolidated balance sheet, the
Group’s interests in joint ventures and associates are shown as
a non-current asset in the balance sheet, representing the
Group’s investment in the share capital of the joint ventures
and associates, as adjusted by post-acquisition changes in the
Group’s share of the net assets or liabilities less provision for
any impairment. Any associated goodwill is included within the
carrying value of the investment and is assessed for
impairment as part of that investment.
Where a joint venture has net liabilities, any loans advanced to
the venture are included in the Group’s equity-accounted
investment in it. Where a venture has net assets, any loans
advanced to it are shown separately in the balance sheet, as a
receivable to the Group.
p) Stock
Stock is stated at the lower of cost and net realisable value.
Cost, net of discounts and volume bonuses from product
suppliers (see note 1e), includes all direct costs incurred in
bringing stock to its present location and condition and
represents nished goods and goods for resale. Net realisable
value is based on estimated selling price, less further costs
1 Accounting policies – continued
j) Taxation – continued
A deferred tax asset is recognised only to the extent that it is
probable that future taxable prots will be available against
which the asset can be utilised. Current and deferred tax is
recognised in the income statement except where it relates
to an item recognised directly in reserves, in which case it is
recognised directly in reserves.
Deferred tax assets and liabilities are offset where there is
a legal right to do so in the relevant jurisdictions.
k) Intangible assets
Goodwill:
Goodwill arising on the acquisition of subsidiary undertakings
and businesses, representing the excess of the fair value of the
consideration given over the fair value of the identiable assets
and liabilities acquired, is recognised initially as an asset at cost
and is subsequently measured at cost less any accumulated
impairment losses. At the acquisition date, goodwill is allocated
to each of the cash-generating units (“CGUs”) expected to
benet from the combination and held in the currency of the
operations to which the goodwill relates. Goodwill is reviewed
at least annually for impairment, or more frequently where there
is an indication that goodwill may be impaired. Impairment is
determined by assessing the future cash ows of the CGUs to
which the goodwill relates. Where the future cash ows are less
than the carrying value of goodwill, an impairment charge is
recognised in the income statement.
On disposal of a subsidiary undertaking, the relevant goodwill
is included in the calculation of the prot or loss on disposal.
Software and licences:
Software and licences includes internal infrastructure and
design costs incurred in the development of software for
internal use. Internally generated software is recognised as an
intangible asset only if it can be separately identied, it is
probable that the asset will generate future economic benets,
and the development cost can be measured reliably. Where
these conditions are not met, development expenditure is
recognised as an expense in the period in which it is incurred.
Software and licences are amortised on a straight-line basis
over their estimated useful economic lives of up to 8 years.
Key money:
Key money paid to enter a property is stated at cost, net of
amortisation and any provision for impairment. Amortisation is
provided on key money at rates calculated to write off the cost,
less estimated residual value, on a straight-line basis over 10
years or the lease term if less.
Acquisition intangibles:
Acquired intangible assets (“acquisition intangibles”) such as
customer bases, customer revenue share agreements, brands
and other intangible assets acquired through a business
combination are capitalised separately from goodwill and
amortised over their expected useful lives of up to 6 years on a
straight-line basis. The value attributed to such assets is based
on the future economic benet that is expected to be derived
from them, calculated as the present value of future cash ows
after a deduction for contributory assets.
l) Property, plant and equipment
Property, plant and equipment is stated at cost, net of
depreciation and any provision for impairment. Depreciation