CASE 16D

Intangibles

Shown below are extracts from Note 1 of the financial statements of TV Station 1 and TV Station 2 from previous financial years.

TV Station 1

Television program rights

Television programs which are available for broadcast are recognised as an asset and stated at cost. Series programs are written off in full upon initial airing. Features are amortised over their estimated useful lives. Furthermore, the carrying values of television program rights are tested for impairment as set out in Note 1(e). Television programs at balance date for which the telecast licence period has commenced or will commence in the succeeding year has been classified as a current asset.

TV Station 2

Program rights

Television program rights are carried at the lower of cost less amortisation and net recoverable amount. Cost comprises acquisition of program rights and, for programs produced using our facilities, direct labour and materials and directly attributable fixed and variable overheads.

Recognition

Television program assets and program liabilities are recognised from the commencement of the rights period of the contract. Contract payments made prior to commencement of the rights period are disclosed as a prepayment and included under television program rights and inventories.

Amortisation policy

Our amortisation policy requires the amortisation of purchased programs on a straight-line basis over a life of between one and three years from commencement of the rights period or over the rights period of the contract (whichever is the lesser). Produced programs are expensed on telecast or in full on the twelfth month after completion.

1 What are the differences between the accounting policies of the two companies for tele