ITF

NOTES (CONT.) (FORMING PART OF THE FINANCIAL STATEMENTS) 5. Summary of significant accounting policies (continued) 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) h) Trade and other receivables Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses. Included within prepayments are balances relating to Davis Cup and Billie Jean King Cup advertisement banners due to be utilised in the first round of the competitions in the subsequent year. 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 $1.366 /£1 at 31 December 2020 ($1.327/£1 at 31 December 2019). 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$0.689/AUS$1 (2019 – US$0.695/AUS$1), and its assets and liabilities are converted at the closing rate US$0.771/AUS$1 (2019 – US$0.703/AUS$1), for consolidation in these financial statements. The resulting exchange differences are recognised through other comprehensive income. Research expenditure and development expenditure that do not meet the criteria below are recognised as an expense as incurred. 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. Over the remaining period of the lease or asset life (if shorter) Trophies presented to the winners of the Davis Cup and Billie Jean King 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 is recognised in 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. 16

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