Experian 2010 Annual Report Download - page 97

95
Introduction 2 – 11
Business review 12 – 51
Governance 52 – 84
Financial statements 85 – 160
4. Signicant accounting policies (continued)
Completed technology
Completed technology acquired as part of a business combination is capitalised at fair value on acquisition and amortised on a
straight line basis over three to eight years, based on the expected life of the asset.
Property, plant and equipment
Property, plant and equipment is held at cost less accumulated depreciation and any impairment in value.
Land is not depreciated and equipment on hire or lease is depreciated over the lower of the useful life and period of the lease.
Depreciation is provided on other property, plant and equipment at rates calculated to depreciate the cost, less estimated
residual value based on prices prevailing at the balance sheet date, of each asset evenly over its expected useful life as follows:
Freehold properties are depreciated over 50 years; -
Leasehold properties with lease terms of 50 years or less are depreciated over the remaining period of the lease; and -
Plant, vehicles and equipment are depreciated over two to ten years according to the estimated life of the asset. -
Financial assets
The Group classies its nancial assets in four categories: loans and receivables, derivatives used for hedging, assets at fair
value through prot and loss and available for sale. The classication is determined at initial recognition and depends on the
purpose for which the nancial assets are acquired.
Loans and receivables
Loans and receivables are non-derivative nancial assets with xed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities more than one year after the balance sheet date which are
classied as non-current assets. The Group’s loans and receivables comprise trade and other receivables and cash and cash
equivalents.
Derivatives used for hedging
Derivative nancial assets used for hedging are included in current assets, except for maturities more than one year after the
balance sheet date which are classied as non-current assets. Derivatives utilised by the Group include interest rate swaps,
cross currency swaps, foreign exchange contracts and equity swaps.
Assets at fair value through prot and loss
Assets at fair value through prot and loss comprise non-hedging derivative nancial instruments.
Available for sale nancial assets
Available for sale nancial assets are non-derivative nancial assets that are either designated to this category or not classied
in the other nancial asset categories.
Available for sale nancial assets are carried at fair value and are included in non-current assets unless management intends
to dispose of the assets within one year of the balance sheet date. Purchases and disposals of such assets are accounted
for at settlement date. Unrealised gains and losses on available for sale nancial assets are recognised directly in other
comprehensive income. On disposal or impairment of such assets, the gains and losses in equity are reclassied through the
Group income statement. Gains and losses recognised on disposal exclude dividend and interest income.
At each balance sheet date, the Group assesses whether there is objective evidence to suggest that available for sale nancial
assets are impaired. In the case of equity securities, a signicant or prolonged decline in the fair value of the security below its
cost is considered in determining whether the security is impaired. If any such evidence exists, the cumulative loss is removed
from equity and recognised in the Group income statement. Impairment losses recognised in the Group income statement on
equity instruments are not subsequently reversed through the Group income statement.
Trade receivables
Trade receivables are initially recognised at fair value (original invoice amount) and subsequently measured at this value less any
provision for impairment. Where the time value of money is material, receivables are carried at amortised cost less any provision
for impairment.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of receivables. Such evidence is based primarily on the pattern of cash
received compared to the terms upon which the trade receivable is contracted. The amount of the provision is the difference
between the carrying amount and the value of estimated future cash ows. Any charge or credit in respect of such provisions is
recognised in the Group income statement within administrative expenses. The cost of any irrecoverable trade receivables not
included in the provision is recognised in the Group income statement immediately within administrative expenses. Subsequent
recoveries of amounts previously written off are credited in the Group income statement within administrative expenses.