Tullett Prebon plc Annual Report 2010
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2010
3. Summary of signiﬁcant accounting policies continued Acquired separately or from a business combination Intangible assets acquired separately are capitalised at cost and intangible assets acquired in a business acquisition are capitalised at fair value at the date of acquisition. The useful lives of these intangible assets are assessed to be either ﬁnite or indeﬁnite. Amortisation charged on assets with a ﬁnite useful life is taken to the income statement through ‘other administrative expenses’. Other than software development costs, intangible assets created within the business are not capitalised and expenditure is charged to the income statement in the year in which the expenditure is incurred. Intangible assets are amortised over their ﬁnite useful lives generally on a straight-line basis, as follows: Software – purchased or developed Software licences up to 5 years over the period of the licence
(h) Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets with ﬁnite lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Where the asset does not generate cash ﬂows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Intangible assets with indeﬁnite useful lives are tested for impairment annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less any cost to sell and value in use. In assessing value in use, the estimated future cash ﬂows are discounted to their present values using a pre-tax discount rate that reﬂects current market assessments of the time 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 carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. (i) Broker contract signing incentives Contract signing incentives paid to brokers are amortised over the lesser of the contract life or recoverable period. Such assets are subject to annual review. (j) Financial assets and ﬁnancial liabilities Financial assets and ﬁnancial liabilities are recognised on the Group’s balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are derecognised when all derecognition criteria of IAS 39 are met and the Group no longer controls the contractual rights that comprise the ﬁnancial instrument. This is normally the case when the instrument is sold, or all of the cash ﬂows attributable to the instrument are passed through to an independent third party. Financial assets are classiﬁed on initial recognition as ‘available-forsale’, ‘loans and receivables’ or ‘at fair value through the income statement’. Financial liabilities are classiﬁed on initial recognition as either ‘at fair value through the income statement’ or as ‘other ﬁnancial liabilities’.
Intangible assets are subject to impairment review if there are events or changes in circumstances that indicate that the carrying amount may not be recoverable. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised. (g) Property, plant and equipment Freehold land is stated at cost. Buildings, furniture, ﬁxtures, equipment and motor vehicles are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is provided on all tangible ﬁxed assets at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the date of acquisition, of each asset on a straight-line basis over its expected useful life as follows: Furniture, ﬁxtures, equipment and motor vehicles 3 to 10 years Short and long leasehold land and buildings period of the lease Freehold land inﬁnite Freehold buildings 50 years Assets held under ﬁnance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.