Page 18 - MEDIASET ESPAÑA / 2012. Financial Statements, Management and Corporate Governance Report

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MEDIASET ESPAÑA COMUNICACIÓN, S.A.
Critical issues concerning the assessment of uncertainty
The preparation of the Company’s annual financial statements require the Directors to make judgments, estimates,
and assumptions which affect the application of accounting principles and the balances of assets, liabilities, income and
expenses, and the disclosure of contingent assets and liabilities at the reporting date.These estimates and assumptions
are based on historical experience and various other factors believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying amount of the assets and liabilities that are not
readily apparent from other sources.Those estimates and assumptions are reviewed on an ongoing basis.The effects of
the reviews of the accounting estimates are recognized in the period during which they are carried out, if they relate
solely to that period, or in the period reviewed and future periods if the review affects both current and future periods.
Nevertheless, the uncertainty inherent in the estimates and assumptions may lead to results that necessitate adjusting
the carrying values of the assets and liabilities affected in the future.
Aside from the general process of making systematic and periodically revising estimates, the directors made certain value
judgments on issues that have a special effect on the financial statements.
The main judgments as well as the estimates and assumptions regarding future events, and other uncertain sources of
estimates at the date of preparation of the financial statements that may cause corrections to assets and liabilities are
as follows:
Impairment of non-current assets
When measuring non-current assets other than financial assets, especially goodwill and intangible assets with an indefi-
nite useful life, estimates must be made to determine their fair value to assess if they are impaired.To determine fair
value, the directors estimate the expected cash flows from assets or the cash-generating units to which they belong
and apply an appropriate discount rate to calculate the present value of these cash flows.
Deferred tax assets
Deferred tax assets are recognized when the Income tax Group is likely to have future taxable profit against which
these assets may be utilized.
To determine the amount of deferred tax assets that can be recognized, the directors estimate the amounts and dates
on which future taxable profits will be obtained, and the reversion period of taxable temporary differences.
Useful life of proper ty, plant and equipment, and intangible assets
The Company periodically reviews the useful lives of its property, plant and equipment, and its intangible assets, pro-
spectively adjusting the provisions for depreciation when the estimates change.
Provisions
The Company recognizes provisions for risks in accordance with the accounting policy set forth in Note 4.The Company
has made judgments and estimates regarding the probability of the occurrence of said risks, as well as the amount
thereof, and has recognized a provision when the risk has been considered likely, estimating the cost that such an
occurrence would represent for it.
Calculation of fair values, values in use and present values
Estimating fair values, values in use, and present values entails calculating future cash flows and making assumptions on
the future values of flows as well as the applicable discount rates.The estimates and related assumptions are based on
historical experience and various other factors understood to be reasonable under the circumstances.