Annual Report 2011 - T-Hrvatski Telekom

84
Consolidated financial statements
When the Group’s share of losses in an associate
equals or exceeds its interest in the company, the
Group does not recognize further losses, unless it has
incurred legal or constructive obligations or made
payments on behalf of the associate.
Unrealized gains on transactions between the Group
and its associate are eliminated to the extent of the
Group’s interest in the company.
d) Investment in joint venture
The Group has an interest in a joint venture which is a
jointly controlled entity, whereby the venturers have a
contractual arrangement that establishes joint control
over the economic activities of the entity. The Group
recognizes its interest in the joint venture using equity
method of accounting. The financial statements of
the joint venture are prepared for the same reporting
period as the parent company.
Adjustments are made where necessary to bring
the accounting policies into line with those of
the Group. Adjustments are made in the Group’s
financial statements to eliminate the Group’s share of
unrealised gains and losses on transactions between
the Group and its jointly controlled entity. Losses on
transactions are recognized immediately if the loss
provides evidence of a reduction in the net realisable
value of current assets or an impairment loss. Interest
in the joint venture is derecognized at the date on
which the Group ceases to have joint control over the
joint venture.
When the Group’s share of losses in a joint venture
equals or exceeds its interest in the company, the
Group does not recognize further losses, unless it has
incurred legal or constructive obligations or made
payments on behalf of the joint venture.
the assets will flow to the Group, and that the cost
of the asset can be measured reliably. After initial
recognition, intangible assets are measured at cost
less accumulated amortization and any accumulated
impairment losses. Intangible assets are amortised
on a straight-line basis over the best estimate of
their useful life. There are no intangible assets that
are assessed to have an indefinite useful life. The
amortization method is reviewed annually at each
financial year-end.
Amortization of the UMTS licence has started
when operations for the UMTS network started its
commercial use, the amortization period is the term of
the licence.
Useful lives of intangible assets are as follows:
Licences and concessions
UMTS licences
Patents and concessions
Right of servitude for Distributive
Telecommunication Infrastructure (DTI)
Software and other assets
20 years
5 — 10 years
Assets under construction are not amortised.
30 years
2 — 5 years
Goodwill arises on the acquisition of subsidiaries. For
the purpose of impairment testing, goodwill acquired
in a business combination is allocated to each of the
Group’s cash generating units, or groups of cash
generating units, that are expected to benefit from the
synergies of the combination. Each unit or group of
units to which the goodwill is allocated represents the
lowest level within the Group at which the goodwill
is monitored for internal management purposes.
Goodwill is reviewed for impairment, annually or more
frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
Unrealized gains/losses on transactions between
the Group and its joint venture are eliminated to the
extent of the Group’s interest in the company.
e) Intangible assets
Intangible assets are measured initially at cost.
Intangible assets are recognized in the event that
the future economic benefits that are attributable to
Impairment is determined for goodwill by assessing
the recoverable amount, based on value in use
estimations, of the cash-generating unit (or group of
cash-generating units), to which the goodwill relates.
Where the recoverable amount of the cash-generating
unit (or group of cash-generating units) is less than
the carrying amount of the cash-generating unit
(group of cash-generating units) to which goodwill
has been allocated, an impairment loss is recognized.