Telstra 2008 Annual Report Download - page 118

Telstra Corporation Limited and controlled entities
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Notes to the Financial Statements (continued)
2.12 Intangible assets (continued)
(d) Deferred expenditure
Deferred expenditure mainly includes costs incurred for basic access
installation and connection fees for in place and new services, and
direct incremental costs of establishing a customer contract.
Significant items of expenditure are deferred to the extent that they
are recoverable from future revenue and will contribute to our future
earning capacity. Any costs in excess of future revenue are recognised
immediately in the income statement. Handset subsidies are
considered to be separate units of accounting and expensed as
incurred.
We amortise deferred expenditure over the average period in which
the related benefits are expected to be realised.
(e) Amortisation
The weighted average amortisation periods of our identifiable
intangible assets are as follows:
The service lives of our identifiable intangible assets are reviewed
each year. Any reassessment of service lives in a particular year will
affect the amortisation expense (either increasing or decreasing)
through to the end of the reassessed useful life for both that current
year and future years. The net effect of the reassessment for fiscal
2008 was an increase in our amortisation expense of $19 million (2007:
$25 million decrease) for the Telstra Group and an increase of $21
million (2007: $25 million decrease) for the Telstra Entity.
In relation to acquired intangible assets, we apply management
judgement to determine the amortisation period based on the
expected useful lives of the respective assets. In some cases, the useful
lives of certain acquired intangible assets are supported by external
valuation advice on acquisition. In addition, we apply management
judgement to assess annually, the indefinite useful life assumption
applied to certain acquired intangible assets.
2.13 Trade and other payables
Trade and other payables, including accruals, are recorded when we
are required to make future payments as a result of purchases of
assets or services. Trade and other payables are carried at amortised
cost.
2.14 Provisions
Provisions are recognised when the group has:
• a present legal or constructive obligation to make a future sacrifice
of economic benefits as a result of past transactions or events;
• it is probable that a future sacrifice of economic benefits will arise;
and
• a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the
present value of those cash flows.
(a) Employee benefits
We accrue liabilities for employee benefits to wages and salaries,
annual leave and other current employee benefits at their nominal
amounts. These are calculated based on remuneration rates expected
to be current at the date of settlement and include related on costs.
Certain employees who have been employed by Telstra for at least ten
years are entitled to long service leave of three months (or more
depending on the actual length of employment), which is included in
our employee benefits provision.
We accrue liabilities for other employee benefits not expected to be
paid or settled within 12 months of balance date, including long
service leave, at the present values of future amounts expected to be
paid. This is based on projected increases in wage and salary rates
over an average of 10 years, experience of employee departures and
periods of service.
We calculate present values using rates based on government
guaranteed securities with similar due dates to our liabilities.
We apply management judgement in estimating the following key
assumptions used in the calculation of our long service leave provision
at reporting date:
• weighted average projected increases in salaries; and
• weighted average discount rate.
Refer to note 16 for further details on the key management
judgements used in the calculation of our long service leave provision.
2. Summary of accounting policies (continued)
Telstra Group
As at 30 June
2008 2007
Identifiable intangible assets
Expected
benefit
(years)
Expected
benefit
(years)
Software assets . . . . . . . . . . . . . . . 66
Patents and trademarks . . . . . . . . . . . 17 18
Licences . . . . . . . . . . . . . . . . . . . . 14 14
Brandnames . . . . . . . . . . . . . . . . . 16 18
Customer bases . . . . . . . . . . . . . . . 11 10
Deferred expenditure . . . . . . . . . . . . 44