Carphone Warehouse 2012 Annual Report Download - page 61

Carphone Warehouse Group plc Annual Report 2012 57
1 Accounting policies continued
e) Share-based payments continued
Share‑based payment charges are also recognised on loans that are provided to employees to settle personal tax liabilities; the cost
ofsuch loans is expensed on grant.
Charges also arise on loans that are provided to employees to fund the purchase of shares as part of long‑term incentive plans, to the extent
to which the loans are not, in certain circumstances, repayable; the cost of the relevant part of such loans is expensed over the course
ofthe relevant incentive plans.
f) Pensions
Contributions to defined contribution schemes are charged to the income statement as they become payable in accordance with the rules
of the schemes.
g) Dividends
Dividend income is recognised when payment has been received. Final dividend distributions are recognised as a liability in the financial
statements in the year in which they are approved by shareholders. Interim and other dividends are recognised in the year in which
theyare paid.
h) Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
tothe lessee. All other leases are classified as operating leases. Rental payments under operating leases are charged to the income
statement on a straight‑line basis over the period of the lease. Leaseincentives and rent‑free periods are amortised through the income
statement over the period of the lease.
i) Taxation
Current tax, including UK corporation tax and overseas tax, is provided at amounts expected to be paid or recovered using the tax rates
andlaws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is provided in full on temporary differences between the carrying amount of an asset or liability in the balance sheet
anditstax base.
Deferred tax liabilities represent tax payable in future periods in respect of taxable temporary differences. Deferred tax assets represent
tax recoverable in future periods in respect of deductible temporary differences, and the carry‑forward of unused tax losses and credits.
Deferred tax is determined using the tax rates that have been enacted or substantively enacted at the balance sheet date and are expected
to apply when the deferred tax asset is realised or the deferred tax liability is settled.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits 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.
j) 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 identifiable 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 CGUs expected
tobenefit 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 flows of the CGUs to which the goodwill relates. Where the future cash flows are less than the carrying value ofgoodwill,
an impairment charge is recognised in the income statement.
On disposal of subsidiary undertakings and businesses, the relevant goodwill is included in the calculation of the profit 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 identified, it is probable that the asset will generate future
economic benefits, and the development cost can be measured reliably. Where these conditions are not met, development expenditure
isrecognised as an expense in the year in which it is incurred. Software and licences are amortised on a straight‑line basis over their
estimated useful economic lives of up to eight 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 ten years or the lease term if less.
Acquisition intangibles
Acquisition intangibles are amortised over their expected useful lives of up to five years. The value attributed to such assets is based on
the future economic benefit that is expected to be derived from them, calculated as the present value of future cash flows after a deduction
for contributory assets.
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