Telstra 2012 Annual Report Download - page 114

Telstra Corporation Limited and controlled entities
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Notes to the Financial Statements (continued)
2.12 Intangible assets (continued)
(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 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 2012 was a decrease
in our amortisation expense of $32 million (2011: $105 million) for
the Telstra Group.
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
10 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 reporting 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
• discount rate.
As at 30 June 2012 we have used a State and Commonwealth
blended (2011: Commonwealth) 10-year Australian government
bond rate to determine the discount rate. This change resulted in a
$35 million decrease of our long service leave expenses and long
service leave liabilities.
Refer to note 16 for further details on the key management
judgements used in the calculation of our long service leave
provision.
(b) Workers’ compensation
We self insure our workers’ compensation liabilities. We take up a
provision for the present value of these estimated liabilities, based
on an actuarial review of the liability. This review includes
assessing actual accidents and estimating claims incurred but not
reported. Present values are calculated using appropriate rates
based on the risks specific to the liability with similar due dates.
Certain controlled entities do not self insure, but pay annual
premiums to third party insurance companies for their workers’
compensation liabilities.
2. Summary of significant accounting policies, estimates, assumptions and judgements
(continued)
Telstra Group
As at 30 June
2012 2011
Identifiable intangible assets
Expected
benefit
(years)
Expected
benefit
(years)
Software assets . . . . . . . . . . 99
Patents and trademarks . . . . . . 69
Mastheads . . . . . . . . . . . . . 55
Licences . . . . . . . . . . . . . . 14 13
Brand names . . . . . . . . . . . . 18 18
Customer bases . . . . . . . . . . 13 13
Deferred expenditure . . . . . . . . 44