Page 19 - MEDIASET ESPAÑA / 2013. Financial Statements, Management and Corporate Governance Report

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MEDIASET ESPAÑA COMUNICACIÓN, S.A.
NOTES TOTHE FINANCIAL STATEMENTS FOR THEYEAR ENDED DECEMBER 31, 2013
(Thousands of euros)
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 indefinite
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.
Future cash flows depend on meeting the business plan for upcoming years, whereas discount rates depend on the
interest rate and the risk premium associated with each cash generating unit. Note 6 includes the hypotheses used to
calculate the value of the cash-generating units, and includes a sensitivity analysis of the changes in the hypotheses utilized.
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,
prospectively adjusting the provisions for depreciation when the estimates change.
Provisions and contingent liabilities
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.When risks are only considered to be possible, no provisions are recognized (Note 14).
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.
The Company values incentive plans through shares at fair value on the date of the concession. Making such an estimate
at that date requires making estimates and judgments on the valuation option models and taking into account the price
of the option in the year, the life of the option, the price of the underlying shares, the expected volatility of the share
price, an estimate of dividend payments, and the risk-free interest rate for the life of the option.