ANNUAL REPORT 2008/09 - Sonova

Key accounting estimates and assumptions
Preparation of fi nancial statements in conformity
with IFRS requires management to make estimates
and assumptions that aff ect the reported amounts
of assets, liabilities, revenue, expenses and related
disclosures. The estimates and assumptions are
continuously evaluated and are based on experience
and other factors, including expectations of future
events that are believed to be reasonable. Actual results
may diff er from these estimates and assumptions.
The main estimates and assumptions, with the
potential of causing an adjustment, are discussed
below.
Cost of business combinations
A business combination agreement may provide for
an adjustment to the cost of the combination contingent
on future events. If the future events do not
occur or the estimate needs to be revised, the cost
of a business combination is revised accordingly,
with a resultant change in the carrying value of goodwill.
As at the end of the fi nancial year 2008/09
such costs contingent on future events (earn-out and
holdback of purchase prices) of CHF 43.3 million
have been included in the cost of business combinations.
Property, plant and equipment and intangible
assets, including goodwill
The Group has property, plant and equipment with
a carrying value of CHF 160.6 million as disclosed
in Note 16 and intangible assets, including goodwill
with a carrying value of CHF 418.4 million as disclosed
in Note 19.
74 CONSOLIDATED FINANCIAL STATEMENTS
Included in the intangible assets are capitalized
costs relating to the activities of Phonak Acoustic
Implants SA, amounting to CHF 15.4 million.
The Group determines annually, in accordance with
the accounting policy stated in Note 3.3, whether
any of the assets are impaired. For the impairment
tests, estimates are made of the expected future
cash fl ows from the use of the asset or cash-generating
unit. The actual cash fl ows could vary signifi -
cantly from these estimates.
Deferred tax assets
The consolidated balance sheet includes deferred
tax assets of CHF 82.2 million related to deductible
diff erences and, in certain cases, tax loss carryforwards
provided that their utilization appears probable.
The recoverable value is based on forecasts
of the corresponding taxable Group Company over a
period of several years. As actual results may
diff er from these forecasts, the deferred tax assets
may need to be adjusted accordingly.
Employee benefi t plans
The Sonova Group has various employee benefi t
plans. Most of its salaried employees are covered
by these plans, of which some are defi ned benefi
t plans. The present value of the defi ned benefi t
obligations at the end of the fi nancial period
2008/09 amounts to CHF 145.0 million as disclosed
in Note 29. With such plans, actuarial assumptions
are made for the purpose of estimating future developments,
including estimates and assumptions
relating to discount rates, the expected return on
plan assets in individual countries and future
wage trends. Actuaries also use statistical data such
as mortality tables and staff turnover rates with a