iesy Repository GmbH - Irish Stock Exchange

(3) Accounting and Valuation Principles
Business Expansion Expenses
COURTESY TRANSLATION FROM THE GERMAN LANGUAGE
FOR INTERPRETATION, THE GERMAN TEXT SHALL PREVAIL
KABELNETZ NRW HoldCo GmbH, Cologne
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR FINANCIAL YEAR 2004—(CONTINUED)
Business expansion expenses include expenses incurred in fiscal year 2001 in connection with the expansion of cable
TV services offered by ish KG to include internet and telephony services. Amortization is provided using the straight-line
method over a period of four years.
Intangible Assets
Intangible assets are stated at cost less ordinary and, if necessary, extraordinary amortization.
Ordinary amortization is provided using the straight-line method over a useful life of three to four years and is charged
pro rata temporis in the year of acquisition.
Goodwill includes the excess purchase price for the shares over the market value of the identifiable assets acquired and
liabilities assumed at the date of the acquisition. Goodwill is amortized using the straight-line method over 15 years.
Property, Plant and Equipment
Property, plant and equipment is stated at acquisition or construction cost less accumulated depreciation.
Construction costs include direct costs and an appropriate share of material and production overheads. Additionally,
costs for general administration incurred during the period of construction have been included.
Depreciation is charged using the straight-line method over the following estimated useful lives:
Fixed assets Useful life
Leasehold improvements and co-utilization rights for cable ducts 10 to 35 years, lease term
Broadband cable network
• Technical equipment 8 to 10 years
• Broadband cable 15 to 20 years
Equipment and fixtures 3 to 23 years
Ordinary depreciation in the year of acquisition is provided using the pro rata method.
Capital Lease
In connection with the acquisition of the broadband cable business in North Rhine-Westphalia, the subsidiary ish KG
entered into a capital lease agreement with Deutsche Telekom AG (“DTAG”) on the right to co-utilize cable ducts that
contain the broadband cable. These assets are stated at the net present value of the minimum lease payments less straight-line
depreciation over the period of the lease agreement (net book value as of the balance sheet date is EUR 338,835k). The
corresponding liability is stated at the net present value of the obligations arising from the lease agreements in each case at
the end of the period.
Financial Assets
Financial assets are stated at acquisition cost unless extraordinary amortization is necessary due to an expected
permanent impairment.
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