Statement of accounting policies Contracts Turnover and profit on short term contracts are recognised when the contracts have been completed. Turnover on long-term contracts represents the value of work done, and excludes value added tax and trade discounts. For long-term contracts, attributable profits are calculated based on the Directors' estimate of total forecast value less total forecast costs and are recognised based on the proportion of cost incurred to date compared to total costs expected to be incurred. Attributable profits are not recognised until the point at which the outcome of the contract can be assessed with reasonable certainty. Provision is made for losses on all long-term contracts as soon as such losses become apparent. Claims on customers or third parties for variations to the original contract are recognised in the profit and loss account once entitlement to the claim has been established. Claims by customers or third parties in respect of work carried out are recognised in the profit and loss account once the obligation to transfer economic benefit has become probable.
Intangible assets - Goodwill Goodwill arising on consolidation is recorded at cost, which includes associated costs of acquisition, less the fair value of assets acquired and any amounts written off for permanent diminution in value. Goodwill is being amortised over its useful economic life, which is estimated to be 20 years. Impairment reviews are performed by the Directors when there has been an indication of potential impairment. The company applies FRS11, where relevant impairment triggers are identified an impairment review is performed and any resulting impairment charge is accounted for in the year it arises. The carrying value is the higher of value in use and recoverable value. Value in use is derived from cash flow projections discounted to net present value at an appropriate discount rate.
Exceptional items Exceptional items are material items which fall within the ordinary activities of the Group and which need to be disclosed by virtue of their size or incidence. Such items are included within operating profit unless they represent profits or losses on the sale or termination of an operation; costs of a fundamental reorganisation or restructuring having a material effect on the nature and focus of the Group's operations; profits or losses on the disposal of fixed assets; or provisions in respect of such items. In these cases separate disclosure is provided on the face of the profit and loss account after operating profit.
Tangible fixed assets Tangible fixed assets are stated at their historic purchase cost less accumulated depreciation. The cost of fixed assets is their historic purchase cost, together with any incidental costs of acquisition. Depreciation is calculated so as to write off the cost of tangible fixed assets, less their estimated residual value, on a straight line basis over their estimated useful economic lives. The principal annual rates used for this purpose are: % Freehold properties Long leasehold properties
2 Over the term of the lease
Equipment, plant and vehicles
10 - 25
Fixtures, fittings and office equipment
10 - 33
No depreciation is provided on freehold land. 24
Keepmoat Annual Report and Financial Statements 2012