Annual Report 2012 - Tivoli

❖tivoli ANNUAL REPORT 2012 ❖Note 2 – ACCOUNTING ESTIMATES AND JUDGEMENTSThe uncertainty of estimatesCalculation of the carrying amount of certain assetsand liabilities requires estimates, judgements andassumptions with respect to future events.The estimates and assumptions made are basedon historical experience and other factors whichManagement deems justifiable in the circumstances,but which are inherently uncertain and unpredictable.The assumptions may be incomplete or inaccurate,and unexpected events or circumstances may arise.Furthermore, the Company is subject to risks anduncertainties which may lead to the actual results deviatingfrom estimates. Particular risks to which theCompany is subject are mentioned in Management’sReview and note 32 to the Financial Statements.It may be necessary to change previous estimates dueto changes in the circumstances on which the previousestimates were based or due to new knowledge orsubsequent events.Estimates which are material to the financial reportingare made by, among other means, calculatingdepreciation, amortisation and impairment, residualvalues, provisions as well as contingent liabilities andassets.Accounting policiesAs part of its application of the Company’s accountingpolicies, Management makes judgements, in additionto estimates, which may materially affect the amountsrecognised in the Annual Report.In 2012, Management has made judgementsregarding:Residual valuesResidual values are determined at the time of acquisitionbased on a specific assessment. Managementbelieves that the residual value of rental buildings canbe determined as twice the minimum rental income.In the case of temporary structures or buildings forwhich there are specific plans to make major changes,the residual value is determined at DKK 0. For theNimb Building, the Concert Hall, the Glass HallTheatre and the Pantomime Theatre, the residualvalues have been determined at DKK 54 million,DKK 50 million, DKK 10 million and DKK 5 million,respectively.In Management’s assessment, as in previous years,residual values are not to be applied to the year’s newrides since most of the individual ride cannot be re-establishedwithout material changes to the constituentparts of the asset in case of dismantling of the ride.Useful livesIn Management’s assessment, the physical life ofTivoli’s rides may be significantly longer than theirentertainment life. Tivoli has chosen to depreciate therides over their entertainment life because the rideswill only be capable of generating positive net cashflows during their entertainment life.50