185000000 IT Holding Finance SA

IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2002
collection previously capitalized, have been expensed. Costs related to the design and production of the prototypes,
samples and models have been capitalized as investments in collection development.
Development Costs
Under Italian Accounting Principles, development costs may be capitalized as intangible assets and amortized on a
straight-line basis over a period not exceeding five years, if certain conditions are met. These costs are written down
to their recoverable amount when an impairment exists.
Under IFRS, development costs must be capitalized. However for the capitalization of development costs the
company should be able to satisfy certain restrictive criteria which include how the intangible asset will generate
future economic benefit and the ability to reliably measure the expenditure attributable to the intangible asset.
(d) Government Grants
Under Italian Accounting Principles, government grants (or contributions) received as compensation for expenses
already incurred are recognized in the income statement once the conditions for their receipt have been met and there
is reasonable assurance that the grant will be received. Revenue-based grants are deferred in the balance sheet and
released to the income statement to match the related expenditure that they are intended to compensate. Capital-based
grants must be deferred and matched with the depreciation on the asset for which the grant arises. Grants that relate to
recognized assets must be presented in the balance sheet as either deferred income, or by deducting the grant in
arriving at the carrying amount of the asset, in which case the grant is recognized as a reduction of depreciation. This
treatment is similar to IFRS.
However certain past transactions occurred before 1998, had been recorded under Italian standards crediting net
equity instead of deferred income. These have been adjusted accordingly.
(e) Revaluation of Fixed Assets “deemed cost”
The Group elected to revalue certain items of property, plan and equipment at the date of transition to IFRS at its fair
value and use this fair value as deemed cost at that date.
The detail is as follows:
Shareholders’
equity
January 1,
2001
Group
net
result
2001
Effect of
merger
2001
F- 137
Shareholders’
equity
January 1,
2002
Group
net
result
2002
Movements in
Shareholders’
equity
2002
Shareholders’
equity
December 31,
2002
(In thousands of Euros)
Building ALLISON S.p.A. ........ 1,449 12 — 1,461 20 — 1,481
Building ITTIERRE S.p.A......... (388) 223 — (165) 308 722 865
Building M.A.C. S.p.A. ............. 1,078 6 — 1,084 (4) — 1,080
Building FD S.p.A...................... 1,197 — (1,197) 0 — — —
Building ITJ S.p.A. .................... (557) 82 1,197 722 — (722) 0
Total........................................... 2,779 323 — 3,102 324 — 3,426
The positive effect on Group net result in 2002 and 2001 is due to a change in the estimated residual useful life of
these revaluated assets compared to the estimate under Italian principles.
(f) Provision for Risks and Charges
Under Italian Accounting Principles, unlike IFRS, the amount of expected future cash expenditure necessary to settle
an obligation is not required to be discounted.
Under IFRS the amount of the Agent’s termination benefits has been re-determined based on the present value of the
expenditures expected to be required to settle the obligation.