ANNUAL REPORT 2008/09 - Sonova

the carrying amount is increased or decreased to
recognize Sonova’s share of profi t or loss of the
jointly controlled entity after the acquisition date.
For applying the equity method the most recent
available fi nancial statements of a joint venture are
used, however due to practicability reasons the
reporting dates might vary up to three months from
the Group’s reporting date. The net assets and
results from joint ventures are adjusted, if necessary,
to comply with the Group’s accounting policies.
The Group’s share of equity in joint ventures
consolidated using the equity method is shown in
the balance sheet as “Investments in associates/
joint ventures,” and its share of the results of operations
for the year is shown in the income statements
as “Share of gain/(loss) in associates/joint
ventures”.
Joint ventures established during the year are
accounted for as “Investment in associates/joint
ventures” from the date on which joint control
over the joint venture is transferred to the Group
and derecognized from that position as of
the date the Group ceases to have joint control.
3.2 Currency translation
The consolidated fi nancial statements are expressed
in Swiss francs (“CHF”), which is the Group’s
pres entation currency. The functional currency of
each Group Company is based on the local economic
environment to which an entity is exposed,
which is normally the local currency.
Transactions in foreign currencies are accounted
for at the rates prevailing at the dates of the
transactions. The resulting exchange diff erences
are recorded in the local income statements of
the Group Companies and included in net income.
Monetary assets and liabilities of Group Companies
which are denominated in foreign currencies are
translated using year-end exchange rates. Exchange
diff erences are recorded as an income or expense.
Non-monetary assets and liabilities are translated at
historical exchange rates. Exchange diff erences
arising on inter-company loans that are considered
part of the net investment in a foreign entity are
recorded in equity.
When translating foreign currency fi nancial statements
into Swiss francs, year-end exchange rates are
applied to assets and liabilities, while average an -
nual rates are applied to income statement ac counts.
Translation diff erences arising from this process
are recorded as a separate component of equity. On
disposal of a subsidiary, the related cumulative
translation adjustment is transferred from equity and
included in the profi t or loss from the disposal in
the income statements.
3.3 Accounting and valuation principles
Cash and cash equivalents
This item includes cash on hand and cash at banks,
time deposits and other short-term highly liquid
investments with original maturities of three months
or less, and bank overdrafts. The cash fl ow statement
summarizes the movements in cash and cash
equivalents. The free cash fl ow is the net amount
of the cash fl ow from operating and from investing
activities.
Other current fi nancial assets
Other current fi nancial assets consist of fi nancial
assets held for trading. Marketable securities
within this category are classifi ed as fi nancial assets
at fair value through profi t or loss (see Note 3.4).
Derivatives are classifi ed as held for trading unless
they are designated as hedges (see Note 3.5).
CONSOLIDATED FINANCIAL STATEMENTS
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