3. DISTRIBUTION OF THE INCOME OF THE CONTROLLING COMPANY The proposal of the Board of Directors which is pending approval of the shareholders of the Controlling Company at their annual general meeting is that Euros 87,266 thousand of the net income for the year ended 31 January 2003 be distributed as dividends and Euros 99,898 thousand allocated to voluntary reserves.
4. VALUATION STANDARDS The main valuation methods applied in preparing the consolidated annual accounts of the Group at January 31 2003, in accordance with those established in the Spanish General Chart of Accounts, are as follows: a) Start-up expenses Start-up expenses are stated at cost net of amortisation generally calculated on a straight-line basis over a period of five years. b) Intangible assets This caption in the accompanying consolidated balance sheet includes the following items: - Intellectual property: this account is charged for the amounts paid to acquire title to, or the right to use, such items, or for the expenses incurred on the registration of intellectual property developed by the Company. Intellectual property is amortised on a straight-line basis over a maximum period of ten years. - Computer software is stated at cost and amortised on a straight-line basis over a period of five years. - Rights on leased assets: the financial lease contracts are recorded as intangible assets at the cost of the related asset, and the total debt for lease payments plus the amount of the purchase option are recorded as a liability. The difference between the two amounts, which represents the interest expenses on the transaction, is recorded as a deferred expense and is charged to expenses each year by the interest method. Exceptionally, certain consolidated companies revalued their leased assets pursuant to Royal Decree-Law 7/1996 June, 7 (see note 15). The rights recorded as intangible assets are amortized over the useful life of the related asset, as explained in section c) below. The value of the recorded rights and the related accumulated amortization are transferred to tangible fixed assets when the purchase option is exercised.
Inditex Annual Report 2002
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