Recipharm Annual Report 2006

SUPPLEMENTARY DISCLOSURES
GENERAL DISCLOSURES
Accounting principles
The accounting principles applied are in accordance with the Swedish Annual Accounts Act and the general
advice and guidelines of the Swedish Accounting Standards Board. Any deviations are specified in the notes
below. The accounting principles remain unchanged compared with the previous year.
Valuation principles, etc
Assets, provisions and liabilities are valued at acquisition cost, unless otherwise stated below.
Receivables
Receivables are reported in the amounts that they are estimated to be received. Foreign receivables and
liabilities have been recorded at the closing rate of exchange.
Inventories
Inventories are valued at the average acquisition or manufacturing cost for the year, although not at a rate
higher than the market value.
Revenue recognition
Revenue recognition takes place when the material risks and benefits associated with the company’s
goods are transferred to the purchaser.
Tax
The Company applies the Swedish Financial Accounting Standards Council's recommendation RR9, Income Tax. Total
tax consists of current tax and deferred tax. Taxes are reported in the income statement except when the underlying
transaction is reported directly against equity, in which case accompanying tax effects are reported in equity. Current
tax (previously Income Tax Paid) is tax to be paid or received for the current year, including adjustments of current
taxes attributable to previous periods. Deferred tax is calculated in accordance with the balance sheet method, taking,
as its basis, temporary differences between the carrying amounts and fiscal values of assets and liabilities. These
amounts are calculated on the basis of the manner in which the temporary differences are expected to be settled and by
using tax rates and tax rules adopted or announced on balance sheet date. Deferred tax assets attributable to deductible
temporary differences and loss carry-forwards are recognised only to the extent it is likely that they will result in
lower tax payments in the future.
Group contributions
Group contributions are reported in accordance with the statements of the Financial Accounting Standards
Council’s Emerging Issues Task Force (URA 7). Group contributions are reported according to their economic
significance, namely by minimising the Group's total tax. As Group contributions do not, therefore, constitute
compensation for performance, these are reported directly against profit brought forward after deduction of
their tax effects.
Leasing
Financial lease agreements, which substantially transfer to the Company all the risks and benefits of the leased asset
associated with ownership, are reported as assets in the consolidated balance sheet statement from the date on which
the agreement is entered. The assets are then valued at the fair value of the leased object or at the present value of the
minimum leasing fees for the period of the lease, if this is lower. The payment of leasing fees is divided into financial
expenses and reduction (repayment of borrowings) of the financial liability, so that a constant interest rate is achieved
on the accounted liability. These financial expenses are charged to profit/loss.
Assets under financial leasing agreements are depreciated over the shorter period of estimated useful life or the
duration of the leasing agreement.
Leasing agreements substantially transferring all risks and benefits associated with ownership to the lessor are classified
as operational leasing agreements. Leasing fees from operational leasing agreements are reported as expenses in the
income statement and are allocated on a straight-line basis over the duration of the agreement.
In the Parent Company, all leasing agreements are classified as operational leasing agreements.