Tiscali 2013 Annual Report Download - page 73

Annual financial report as at 31 December 2013
Date
File Name
Status
Page
-
Annual Report as at 31
December 2013
73
The minimum and maximum depreciation rates applied during 2013 are those indicated below:
Buildings
3%
Plant
12%-20%
Equipment
12%-25%
Routine maintenance expenses are charged to the income statement in full, in the financial year in
which the costs were incurred, while maintenance expenses of an incremental nature are allocated to
relevant assets and are depreciated over the residual useful life.
Gains and losses arising on disposals of items of property, plant and machinery are calculated as the
difference between sales revenue and net book value and are booked to the income statement for the
year.
Assets held under finance lease
Leases are classified as financial leases if all the risks and benefits of ownership are transferred to the
lessee. All other leases are considered operating leases.
Assets held under financial leases are recognised as Group assets at their fair value at the time of
stipulation of the lease or, if lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the balance sheet as a financial lease obligation,
under financial payables. Lease payments are divided into their capital and interest elements.
Financial charges are directly booked to the income statement for the year.
Assets held under financial leases are depreciated using the straight-line method based on their
estimated useful life, in the same manner as owned assets, or over the lease term if shorter and only if
there is no reasonable certainty of redeeming the asset considering the lease expiry terms.
Moreover, as for asset disposal and backdating operations on the basis of financial lease contracts,
the accomplished capital gains are deferred for the duration of contracts or the residual life of the
asset (if lower).
Operating lease payments are booked to the income statement as costs on an accruals basis.
Impairment of assets
Goodwill and financial statement assets are subject to an impairment test each year or more
frequently if there is indication of impairment. The book value of intangible assets with an unspecified
useful life and of property, plant and machinery, is checked each time there is indication that the asset
has suffered impairment. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment. Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the Cash
Generating Unit (CGU) to which the asset belongs. The recoverable amount is the higher between the
‘fair value’ less sales costs and its utilisation value. When assessing the utilisation value, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments on the value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its book
value, the latter is written down to its recoverable amount. The relevant impairment is booked to the
income statement under write-downs. If the reasons for impairment are considered to no longer apply
in the current year, the book value of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but not beyond the net book value that would have been