Carphone Warehouse 2014 Annual Report Download - page 69

Carphone Warehouse Group plc
Annual Report 2014 67
FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES continued
j) GOODWILL AND INTANGIBLE ASSETS continued
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 include customer relationships and brands arising on the CPW Europe Acquisition. These intangible assets are
amortised on a straight-line basis over their expected useful lives of up to eight years for customer relationships and up to ten years for
brands. 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.
k) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is measured at cost less accumulated depreciation and any accumulated impairment losses. Anygain
orloss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Depreciation is provided for on all property, plant and equipment (excluding land) at rates calculated so as to write off the cost, less
theestimated residual value, of each asset on a straight-line basis over its expected useful life from the date it is brought into use.
Ratesapplied to different classes of property, plant and equipment are as follows:
Short leasehold costs: % per annum or the lease term if less
Network equipment and computer hardware: .–% per annum
Fixtures and fittings: –% per annum
Investment property (property held to earn rental income and/or for capital appreciation) is stated at cost, net of accumulated depreciation
and provisions for impairment. Depreciation is applied at –% per annum.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
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 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.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined
hadno impairment loss been recognised for the asset or CGU in prior years. A reversal of an impairment loss is recognised immediately
intheincome statement.
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) ASSETS HELD FOR SALE
Non-current assets or disposal groups are classified as held for sale if it is highly probable that they will be recovered primarily through
sale rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the assets or disposal
group is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify
for recognition as a completed sale within one year from the date of classification. Such assets, or disposal groups, are generally measured
at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a non-current asset or disposal group is allocated
first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is booked to stock, financial assets,
deferred tax assets, employee benefits assets or investment property, which continue to be measured in accordance with the Group’s other
accounting policies. Impairment losses on initial classification as held for sale and subsequent gains and losses on re-measurement are
recognised in profit or loss. Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised
or depreciated, and any equity-accounted investee is no longer equity accounted.