Experian 2010 Annual Report Download - page 99

97
Introduction 2 – 11
Business review 12 – 51
Governance 52 – 84
Financial statements 85 – 160
4. Signicant accounting policies (continued)
Net investment hedges
Any gain or loss on the hedging instrument relating to the effective portion of the hedge of a net investment in an undertaking
whose functional currency is not the US dollar is recognised in other comprehensive income; the gain or loss relating to
the ineffective portion is recognised immediately in net nance costs in the Group income statement. Gains and losses
accumulated in equity are included in the Group income statement when the undertaking is disposed of.
Non-hedging derivatives
Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the
Group income statement. Costs in respect of derivatives entered into in connection with social security obligations on employee
share incentive plans, other than those of a nancing nature, are charged as an employment cost; other costs and changes in fair
value on such derivatives are charged within nancing fair value remeasurements in the Group income statement.
Derivatives embedded in other nancial instruments or other host contracts are treated as separate derivatives when their risks
and characteristics are not closely related to those of host contracts, and the host contracts are not carried at fair value with
unrealised gains or losses reported in the Group income statement.
Impairment of non-nancial assets
Assets that are not subject to amortisation are tested annually for impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell, and value-in-use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identiable cash ows, which are CGUs.
Trade payables
Trade payables are recognised initially at fair value. Where the time value of money is material, payables are carried at amortised cost.
Contingent consideration
Where part or all of the amount of purchase consideration is contingent on future events, the cost of the acquisition initially
recorded includes a reasonable estimate of the fair value of the contingent amounts expected to be payable in the future. The
cost of the acquisition is adjusted when revised estimates are made, with corresponding adjustments made to goodwill until the
ultimate outcome is known.
Where part or all of the amount of disposal consideration is contingent on future events, the disposal proceeds initially recorded
include a reasonable estimate of the fair value of the contingent amounts expected to be receivable and payable in the future.
The proceeds are adjusted when revised estimates are made, with corresponding adjustments made to debtors and creditors as
appropriate, and prot and loss on disposal, until the ultimate outcome is known.
Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in the Group income statement, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In such cases the tax is recognised
in other comprehensive income or directly in equity as appropriate.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet
date in the countries where the Group operates and generates taxable income.
Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the Group nancial statements. However, if the deferred tax arises from initial recognition of an asset or liability
in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable
prot or loss, it is not accounted for. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply
to the period when the asset is realised or the liability is settled, based on the tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax assets are recognised to the extent that it is probable that future taxable prot will be available against which the
temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will
not reverse in the foreseeable future.
Provisions
Provisions are recognised when:
The Group has a present legal or constructive obligation as a result of past events; and -
It is more likely than not that an outow of resources will be required to settle the obligation; and -
The amount has been reliably estimated. -