ITF

NOTES (CONT.) (FORMING PART OF THE FINANCIAL STATEMENTS) 5. Summary of significant accounting policies (continued) b) Investment income/expense and gains/losses on investments c) Currency translation d) Intangible assets - research and development e) Property, plant and equipment Improvements to leasehold property Computers and databases 3 years Furniture and equipment, technical equipment 4 years f) Inventories g) Investments and financial assets held at fair value through profit or loss (FVPL) Investments are included on the Statement of Financial Position on trade-date, the date on which the group commits to purchase or sell the asset. Investments are valued at their fair value, which is determined by reference to quoted market prices at the balance sheet date (classified as level 1 in the fair value hierarchy), with changes recognised directly in the income and expenditure statement. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. The group has applied IFRS 9 retrospectively. However, there are no changes to the accounting treatment of investments and financial assets held at FVPL. Over the remaining period of the lease or asset life (if shorter) Trophies presented to the winners of the Davis Cup and Fed Cup are not valued. Development expenditure that is directly attributable to the design and testing of identifiable and unique software products controlled by the group are recognised as intangible assets when: it is technically feasible to complete the software so that it will be available for use; management intends to complete the software and use or sell it; there is an ability to use or sell the software; it can be demonstrated how the software will generate probable future economic benefits; adequate technical, financial and other resources to complete the development and to use or sell the software are available; and the expenditure attributable to the software during its development can be reliably measured. Directly attributable costs that are capitalised as part of the product include employee costs. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use. The group amortises intangible assets with a limited useful life using the straight-line method over 3 years. Property, plant and equipment are stated at cost, less accumulated depreciation. The cost of the tangible fixed assets is written off in equal instalments over their useful lives as follows: Inventories are valued at the lower of cost and net realisable value. Where inventories are held for distribution for no consideration such as development equipment, the carrying amount is held in inventory at cost and is recognised as an expense on distribution. Assets and liabilities in currencies other than US Dollars are translated into US Dollars at appropriate rates of exchange prevailing at the balance sheet date. Income and expenses in such currencies during the year have been translated into US Dollars at the rates of exchange prevailing at the dates of the relevant transactions. Exchange differences arising from these translations are recognised in the consolidated income and expenditure statement. Sterling was converted at $1.327 /£1 at 31 December 2019 ($1.276/£1 at 31 December 2018). In the case of Hopman Cup Pty Ltd, whose activities are recorded in Australian Dollars, income and expenses are converted at the average rate of exchange, US$0.695/AUS$1 (2018 – US$0.746/AUS$1), and its assets and liabilities are converted at the closing rate US$0.703/AUS$1 (2018 – US$0.705/AUS$1), for consolidation in these financial statements. The resulting exchange differences are recognised through other comprehensive income. Investments are valued at their fair value, which is determined by reference to quoted market bid prices at the balance sheet date. Valuations are provided by the investment managers. Gains or losses arising from this valuation are shown in the consolidated income and expenditure statement in accordance with IFRS 9. Interest is recognised in the income statement on an accruals basis, and dividend income is recognised when the ITF's right to receive payment is established. Research expenditure and development expenditure that do not meet the criteria below are recognised as an expense as incurred. 16

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