Annual report (20-F) - Ono

asis over the term of the relevant broadcast rights agreement. The rights to be used within one
year are presented as inventory in the Other current assets caption.
• Finance leases
Assets acquired under financial lease agreements are booked as intangible assets. These assets
are depreciated at the same rates used for similar tangible assets. The related financial expense is
charged to the statement of profit and loss over the term of the lease using the effective interest
method.
h) Tangible assets
Tangible assets are stated at cost. Additions, replacements, installation costs and major improvements that
increase productivity, capacity or efficiency or that extends the economic life of the assets are capitalized.
Costs for normal repairs and maintenance are charged to the statement of profit and loss as incurred.
When tangible assets are retired or otherwise disposed of, the related asset and accumulated depreciation
accounts are adjusted accordingly.
Estimated useful lives of tangible assets are shown below:
Years
Network and technical equipment 10 to 35
Customer premise equipment 6 to 7
Computer hardware 4 to 5
Other tangible assets 5 to 13
During 2004, the Group has analyzed the estimated useful lives of the tangible assets with the purpose of
adapting them to the industry and actual technological situation. The main changes in the useful lives of
certain network assets are as follows:
2004 2003
Duct 35 20-25
Switching equipments 10-15 15-25
The effect of this change in the useful lives has implied a reduction in the amortization expense in 2004
amounting to Euro 13.4 million.
The Group evaluates the carrying value of all assets whenever events or circumstances indicate the
carrying value of assets may exceed their recoverable amounts. An impairment loss is recognized when
the estimated future cash flows expected to result from the use of an asset are less than the carrying value
of the asset.
i) Financial assets
This caption mainly includes tax credits that have been recognized by the Group companies in their
financial statements. Tax credits are accounted for as financial investments when they are expected to be
recovered beyond one year.
Tax credits expected to be recovered within one year, if any, are presented as Accounts receivable.
j) Deferred expenses
Costs related to the issuance of debt and certain other financial arrangements are deferred and amortized
over the life of the related debt on a straight-line basis, which approximates the costs that would be
incurred under the effective interest method.
In June 2004 the Group re-estimated the expected life of the debt related to bonds issuances and,
accordingly, reduced the period over which the related deferred expenses are amortized. This change has
result in a euro 6.2 million extraordinary loss in 2004.
F-9