Thorn-EMI 1995 Annual Report

Accounting policies
Depreciation of tangible fixed assets
Depreciation of tangible fixed assets is calculated on cost at rates estimated to write off the
cost less the estimated residual value of the relevant assets by equal annual amounts over their
expected useful lives; effect is given, where necessary, to commercial and technical obsolescence.
The annual rates used are:
Freehold buildings and long-term leasehold property
Short-term leasehold property
Plant, equipment and vehicles
2 per cent
Period of lease
10 - 331/: per cent
Rental equipment (other than that on rent-to-own contracts) is depreciated at rates estimated
to write off the cost to a nil residual value by equal annual amounts over its estimated useful
life, from the monrh ofinsrrllarion.
The estimated useful lives ofrental equipment (other than that on rent-to-own contracts) are:
Colour television sets:
UK, Ireland, Australia and New Zealand
All other countries
Video recorder equipment
Appliances
Personal computers
Rental equipment placed on rent-to-own contracts is depreciated over the expected life of those
contracts, for periods ranging from 12 months to 60 months.
ChangeJ in a((ounting policies and presentation of flnancial lnformation
During the year the Accounting Standards Board issued Financial Reporting Standard 5
Reporting the Substance ofTiansactions (FRS 5), Financial Reporting Standard 6 -Ac4uiitions
and Mergers (FRS 6) and Financial Reporting Standard 7 - Fair Values in Ac1uisition Accoantirg
(FRS 7). These accounts comply with these standards and comparative figures have been restated
where applicable.
FRS 5 requires the substance, rather than the legal form, of a transaction to be reflected in
the accounts. The assets, liabilities, income and costs of the THORN EMI Group General
Employee Benefrt Trust (EBT) have therefore been incorporated in the accounts. The Ordinary
Shares of the Company held by the EBT are included in current asset investments and written
down to nil over the minimum period of service to which the conditions of shares awarded to
employees relate. The borrowings of the EBT, which have been guaranteed by the Company, are
included in borrowings with the net financing costs of the EBT being shown as finance charges
in the profit and loss account.
FRS 5 has extended the disclosures required for business combinations.
FRS 7 provides rules on the recognition of assets and liabilities acquired and the
measurement of their fair values under acquisition accounting. Certain costs associated with
the reorganisation and integration of acquired businesses are now required to be taken to the
profit and loss account (previously charged to goodwill) and these are shown as operating
exceptional items.
Reorganisation and integration (osts
Costs relating to fundamental reorganisation are charged as non-operating exceptional items.
Other reorganisation costs are charged against operating profit and are separately disclosed
where material due to their size or incidence.
6 years
5 years
5 years
5 years
3 years