Untitled - David Kronemyer

DEPRECIATION oF TANGIBLE FIXED ASSETS Depreciation of property, plant" equipment
and vehicles is calculatcd on cost at rates estimated to write off the cost oI the relevant
assets by equal annual amounts over their expeaed uselul lives; eflect is given, where
necessary" to commercial and technical obsolescence.
Rental equipment is depreciated to a nil residual value, by the application ol basic
depreciation rates, on a graduated basis, liom the month of installation, so that a relatively
high charge is borne in the early years.
The annual rates used are:
Freehold buildings and long leasehold prope*y, 20lo
Short leasehold property, over period of lease,
Plant, equipment and vehicles, at rates ranging liom 100/o tr-r 33%0/0.
Rental equipment; the periods used are:
Colour sets, 6 years (overseas, other than Australia and New Zealand, 5 years),
Video equipment, 4 years,
Monochrome sets, I year.
LEASING Tangible fixed assets acquired under finance leases are not capitalised. Rentals
payable under both linance and operating leases are written off as incurred.
REoRcANISATION CosTS The costs of business reorganisation are provided when a
reorganisation decision has been made in principle. Costs relating to the reorganisation of
continuing businesses are chargcd against profit before taxation and those relating to
withdrawal lrom businesses, or their lundamental restructure, are charged as
extraordinary items.
STOCKS and work in progress are stated at the lower of cost and net realisable value, less
progress payments on uncompleted contracts and provisions lbr expected losses. Cost
includes manulacturing overheads where appropriate. A consewatively estimated profit
elcmcnt is taLen during the course of long-term conbacts.
The inclusion of attributable prolit in long-term conhact work in progress is in
accordance u,ith Statement of Standard Accounting Practice No. 9.'l'his constitutes a
departure liom the statutory valuation rules, but is required by S22B(2) ol the Companies
Act 1985 to enable the accounts to give a true and lair view. As progre66 pa)'ments cannot
meaninglully be allocated between cost and prolit, it is impracticable to deterrnine the
effect of the departure on the value ol the long-term contract work in progress shown in
the balance sheet.
TAXATION lhe Company has undertaken to discharge the liability to corporation tax of
the majority of wholly-owned UK subsidiaries. Their IJK tax liabilities are, therefore, dealt
*it-h in th" a,. ounto ol the Companl.
Delerred taxation is calculated using the liability method in respect of timing
dillerences arising primarily lrom the dillerent accounting and tax treatment of
depreciation. Provision is made, or recovery anticipated, where timing dillerences are
cxpected to reverse in the lbreseeable luture.
WARR{NTY PROVISIONS Many products carry formal guarantees of satislactory
performance lbr varying periods fbllowing purchase by customers, Provision is made lbr
the estimated cost of honouring unexpired warranties.
RESEARCH AND DEVELOPMENT erpenditure is wdtten oll as incur:red.