Marks and Spencer 2007 Annual Report Download - page 58

11 AACCCCOOUUNNTTIINNGG PPOOLLIICCIIEESS continued
Regular valuations are prepared by independent professionally
qualified actuaries in respect of the defined benefit schemes.
These determine the level of contribution required to fund the
benefits set out in the rules of the plans and allow for the
periodic increase of pensions in payment. The service cost
of providing retirement benefits to employees during the year,
together with the cost of any benefits relating to past service,
is charged to operating profit in the year.
A credit representing the expected return on the assets of the
retirement benefit schemes during the year is included within
interest. This is based on the market value of the assets of the
schemes at the start of the financial year.
A charge is also made within interest representing the expected
increase in the liabilities of the retirement benefit schemes during
the year. This arises from the liabilities of the schemes being one
year closer to payment.
The difference between the market value of the assets and the
present value of accrued pension liabilities is shown as an asset
or liability in the balance sheet.
Actuarial gains and losses are recognised immediately in
the statement of recognised income and expense.
I
Innttaannggiibbllee aasssseettss
A Goodwill
Goodwill arising on consolidation represents the excess
of the cost of acquisitions over the Group’s interest in the
fair value of the identifiable assets and liabilities (including
intangible assets) of the acquired entity at the date of the
acquisition. Goodwill is recognised as an asset and
assessed for impairment at least annually. Any impairment
is recognised immediately in the income statement.
Upon disposal of a subsidiary the attributable goodwill is
included in the calculation of the profit or loss arising on
disposal. Goodwill written off to reserves under UK GAAP
prior to 31 March 1998 has not been reinstated and is not
included in determining any subsequent profit or loss on
disposal.
B Brands
Acquired brand values are held on the balance sheet at cost
and amortised on a straight-line basis over their estimated
useful lives. Any impairment in value is recognised
immediately in the income statement.
C Software intangibles
Where computer software is not an integral part of a related
item of computer hardware, the software is treated as an
intangible asset. Capitalised software costs include external
direct costs of material and services and the payroll and
payroll-related costs for employees who are directly
associated with the project.
Capitalised software development costs are amortised on
a straight-line basis over their expected economic lives,
normally between three to five years.
P
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A Land and buildings
The Group’s policy is to state property, plant and
equipment at cost less accumulated depreciation and
not to revalue property for accounting purposes.
B Interest
Interest is not capitalised.
C Depreciation
Depreciation is provided to write off the cost of tangible
non-current assets (including investment properties), less
estimated residual values, by equal annual instalments as
follows:
• freehold land: not depreciated;
• freehold and leasehold buildings with a remaining lease
term over 50 years: depreciated to their residual value
over their estimated remaining economic lives;
• leasehold buildings with a remaining lease term of less
than 50 years: over the remaining period of the lease;
• fit-out: 10-25 years according to the estimated life of
the asset; and
• fixtures, fittings and equipment: 3-15 years according
to the estimated life of the asset.
Residual values and useful economic lives are reviewed
annually. Depreciation is charged on all additions to, or
disposals of, depreciating assets in the year of purchase or
disposal. Any impairment in value is charged to the income
statement.
Notes to the financial statements continued
5
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