Annual Report and Accounts 2010/11 - Cancer Research UK

Notes to the Accounts
(continued)
1.Accounting policies (continued)
The Group funds research by employees (‘direct costs’) and grant-funded researchers (‘grant costs’).
Direct costs
These include an allocation of central support costs.
Grant costs
A research grant liability is recognised when the Group formally notifies the recipient of the
award. The liability is measured as the total of expected payments for the period to the next
scientific review. Provision is made for the expected total payments on life chairs/fellowships
when the appointment is first made. Grant liabilities for awards where more than five years
of expected payments are provided at the outset are discounted to current value using the
weighted average cost of capital.
Support costs
Overhead costs which are integral to the Group’s charitable activities are allocated accordingly
as shown in Note 8.
The total of potential payments that would be made after the next scientific review if future scientific reviews are successfully
completed is disclosed as grant commitments.
Net investment gains and losses
The SOFA includes realised gains and losses from investments that have been sold, and unrealised gains and losses arising from
the revaluation of investments that are still held.
Goodwill
Goodwill is calculated as the difference between the acquisition cost of a consolidated entity and the aggregate of the fair
values of that entity’s assets and liabilities. Negative goodwill arises when the aggregate fair values of the consolidated entity’s
assets and liabilities exceed any acquisition cost. Negative goodwill is recognised in the SOFA in the periods in which the assets
are recovered. Negative goodwill arising from the acquisition of the Beatson Institute for Cancer Research is amortised on a
straight-line basis over ten years.
Fixed assets and depreciation
Fixed assets are included at cost where that is greater than £5,000 for the Charity and its charitable subsidiaries and £500 for its
trading subsidiaries, except that batches of items individually below those thresholds are capitalised if they form part of one
project and together cost more than £50,000. Software is only capitalised where its cost exceeds £50,000. Cost includes the
original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
The costs of laboratory refurbishments are written off as they are incurred. Depreciation is provided so as to write off the cost
of fixed assets on a straight-line basis over their expected useful economic lives, as follows:
Freehold land
Not depreciated
Freehold buildings
25 years
Leasehold buildings and research facilities
25 years, or lease period if shorter
Plant and equipment
4–5 years
Retail fixtures and fittings
5 years
Computer equipment and software
3 years
Investments
Listed investments are stated at market value. Unlisted investments are included at cost as an approximation to market value,
unless there is specific evidence to the contrary. Subsidiary companies are valued at cost. All cash balances are shown in cash
and short-term deposits. The SOFA includes unrealised gains and losses arising from the revaluation of the investment portfolio
in the year.
Programme-related investments
Programme-related investments are held at cost less any provision for diminution in value.
Impairment of fixed assets and investments
Fixed assets and investments are subject to review for impairment when there is an indication of a reduction in their carrying
value. Any impairment is recognised in the year in which it occurs.
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