Carphone Warehouse 2012 Annual Report Download - page 62

Carphone Warehouse Group plc Annual Report 201258
1 Accounting policies continued
k) Property, plant and equipment
Property, plant and equipment, principally for the Group comprising investment property (property held to earn rental income and/or for
capital appreciation) is stated at cost, net of depreciation and any provision for impairment. Depreciation is provided on all property, plant
and equipment, except for land, 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:
Investment properties: 2–4% per annum
Short leasehold costs: 10% per annum or the lease term if less
Network equipment and computer hardware: 12.5–50% per annum
Fixtures and fittings: 20–25% per annum
Motor vehicles: 25% per annum
l) 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 flows that are largely independent of those from other assets or groups of assets.
m) Investments
Investments, other than subsidiaries and joint ventures, 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.
n) Interests in joint ventures
Interests in joint ventures are accounted for using the equity method. The consolidated income statement includes the Group’s share
ofthe post‑tax profits or losses of the joint ventures based on their financial statements for the year. In the consolidated balance sheet,
the Group’s interests in joint ventures are shown as a non‑current asset in the balance sheet, representing the Group’s investment in
theshare capital of the joint ventures, 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 it are included in the Group’s equity‑accounted investment in it. Whereajoint
venture has net assets, any loans advanced to it are shown separately in the balance sheet, as a receivable to the Group.
o) 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1d),
includes all direct costs incurred in bringing stock to its present location and condition and represents finished goods and goods for resale.
Net realisable value is based on estimated selling price, less further costs expected to be incurred to disposal. Provision is made for
obsolete, slow‑moving or defective items where appropriate.
p) Cash and cash equivalents
Cash and cash equivalents represent cash on hand, demand deposits and short‑term, highly liquid investments that are readily
convertible to known amounts of cash.
q) Loans and other borrowings
Other borrowings in the balance sheets of joint ventures represent committed and uncommitted bank loans and loans from shareholders
other than the Group.
Bank fees and legal costs associated with the securing of external financing are ordinarily capitalised and amortised over the term of the
relevant facility. Borrowing costs associated with qualifying assets are included in the cost of the asset. All other borrowing costs are
recognised in the income statement in the period in which they are incurred.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED