Notes to the combined and consolidated financial statements - Mondi

Notes to the combined and
consolidated financial statements continued
for the year ended 31 December 2009
1 Accounting policies (continued)
Annual periods
beginning
Standard on or after Impact on the Group
IAS 28 (AC 110) – Investments in Associates 1 July 2009 No material impact on the Group.
IAS 31 (AC 119) – Interests in Joint Ventures 1 July 2009 No material impact on the Group.
IAS 36 (AC 128) – Impairment of Assets 1 January 2010 No material impact on the Group.
IAS 38 (AC 129) – Intangible Assets 1 July 2009 No material impact on the Group.
IAS 38 (AC 129) – Intangible Assets 1 January 2010 No material impact on the Group.
IAS 39 (AC 133) – Financial Instruments: 1 July 2009 No material impact on the Group.
Recognition and Measurement
IAS 39 (AC 133) – Financial Instruments: 1 January 2010 No impact on the Group.
Recognition and Measurement
IFRIC 9 (AC 442) – Reassessment of 1 July 2009 No material impact on the Group.
Embedded Derivatives
IFRIC 16 (AC 449) – Hedges of a Net 1 July 2009 The Group does not hedge net investments in
Investment in a Foreign Operation foreign operations, thus the amendment is expected
to have no impact on the Group.
IFRIC 17 (AC 450) – Distributions of 1 July 2009 No impact on the Group.
Non-cash Assets to Owners
IFRIC 18 (AC 451) – Transfers of 1 July 2009 No impact on the Group.
Assets from Customers
Accounting estimates and critical judgements
The preparation of the Group’s combined and consolidated financial statements includes the use of estimates and assumptions
which affect certain items reported in the combined and consolidated statement of financial position and the combined and
consolidated income statement. The disclosure of contingent assets and liabilities is also affected by the use of estimation
techniques. Although the estimates used are based on management’s best knowledge of current circumstances and future events
and actions, actual results may differ from those estimates. The estimates and assumptions that have a risk of causing a material
adjustment to the carrying amounts of certain assets and liabilities within the next financial year are disclosed below.
Estimated residual values and useful economic lives
The carrying values of certain tangible fixed assets are sensitive to assumptions relating to projected residual values and useful
economic lives, which determine the depreciable amount and the rate at which capital expenditure is depreciated respectively. The
Group reassesses these assumptions at least annually or more often if there are indications that they require revision. Estimated residual
values are based on available secondary market prices as at the reporting date unless estimated to be zero. Useful economic lives are
based on the expected usage, wear and tear, technical or commercial obsolescence and legal limits on the usage of capital assets.
Estimated impairment of goodwill and tangible fixed assets
For the year ended 31 December 2009 the Group incurred asset impairment costs of E88 million (2008: E106 million) and
goodwill impairment costs of E12 million (2008: E194 million).
The Group assesses annually whether goodwill and tangible fixed assets have suffered any impairment, in accordance with the stated
Group accounting policy. The recoverable amounts of goodwill allocated to cash-generating units and tangible fixed assets are
determined based on value-in-use calculations, which require the exercise of management’s judgement across a limited range of input
assumptions and estimates. The principal assumptions used relate to the time value of money and expected future cash flows.
The Group assesses annually whether there are any indications that items of property, plant and equipment, including assets in the
course of construction, have suffered any impairment. Indications of impairment are inherently judgemental and may require
management to assess both internal and external sources of information.
98 Annual report and accounts 2009 Mondi Group