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2015

RCS GROUP CONSOLIDATED FINANCIAL STATEMENTS

19

1.6 Financial Instruments (continued)

Cashflow hedge accounting (continued)

in other comprehensive income is included in the income

statement in the period when the hedged item affects the

income statement. The ineffective portion of any gain or loss

is recognised immediately in the income statement.

Where the hedging instrument or hedge relationship is

terminated but the hedged transaction is still expected to

occur, the cumulative unrealised gain or loss at that point

remains in equity and is recognised in accordance with the

above policy when the transaction occurs. If the hedged

transaction is no longer expected to occur, the cumulative

unrealised gain or loss is recognised in the income statement

immediately.

Offset

Financial assets and financial liabilities are offset and the

net amount reported in the statement of financial position

when the RCS Group has a legally enforceable right to set

off the recognised amounts, and intends either to settle on

a net basis, or to realise the asset and settle the liability

simultaneously.

1.7 Property and Equipment

Recognition and measurement

Items of property and equipment are measured at cost less

accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the

acquisition of the asset. Purchased software that is integral

to the functionality of the related equipment is capitalised as

part of that equipment.

When parts of an item of property and equipment have

different useful lives, they are accounted for as separate items

(major components) of property and equipment.

Gains and losses on disposal of an item of property and

equipment are determined by comparing the proceeds from

disposal with the carrying amount of property and equipment

and are recognised net within “operating costs” in the income

statement.

Subsequent costs

The cost of replacing part of an item of property and

equipment is recognised in the carrying amount of the item

if it is probable that the future economic benefits embodied

within the part will flow to the RCS Group and its cost can

be measured reliably. The carrying amount of the replaced

part is derecognised. The costs of the day-to-day servicing

of property and equipment are recognised in the income

statement as incurred.

Depreciation

Depreciation is recognised in the income statement on a

straight-line basis over the estimated useful lives of each part

of an item of property and equipment.

The estimated depreciation rates for the current and

comparative periods are as follows:

– Computer hardware 33%

– Furniture and fittings 16% - 20%

– Leasehold property 10%

– Motor vehicles

20%

Depreciation methods, useful lives and residual values are

reviewed at each reporting date.

Depreciation of an item of property and equipment

commences when the item is available for use.

1.8 Reinsurance Contract issued in Cell Captive

Arrangement

In-substance reinsurance contracts issued are those contracts

that transfer significant insurance risk from the insurer to the

respective company in a cell captive arrangement.

Accounting Policies

(continued)

for the period ended 31 December 2015