ArcelorMittal Annual Report 2008

IFRIC 17 - Distributions of Non-cash
Assets to Owners
In November 2008, the IFRIC issued
IFRIC 17, “Distributions of Non-cash Assets
to Owners”, that clarifies that a dividend
payable should be recognized when the
dividend is appropriately authorized and
is no longer at the discretion of the entity.
The dividend payable should be measured
at the fair value of the net assets to be
distributed. The entity should recognize
the difference between the dividend paid
and the carrying amount of the net assets
distributed in profit or loss and the entity
needs to provide additional disclosures
if the net assets that are being held
for distribution to owners meet the
definition of a discontinued operation.
This interpretation applies prospectively
to pro rata distributions of non-cash
assets except for common control
transactions and is effective for annual
periods beginning on or after July 1, 2009.
Earlier application is permitted.
The Company is in the process of assessing
whether there will be any material changes
to its financial statements upon the
adoption of IFRIC 17. This interpretation
has not yet been endorsed by the EU.
IFRIC 18 - Transfers of Assets
from Customers
In January 2009, the IFRIC issued IFRIC 18,
“Transfers of Assets from Customers”,
that provides guidance on the accounting
for transfers of cash or items of property,
plant and equipment by entities that
receive such transfers from their
customers. Agreements within the scope
of this interpretation are agreements
in which an entity receives from a customer
an item of property, plant and equipment
that the entity must then use either to
connect the customer to a network or
to provide the customer with ongoing
access to a supply of goods or services,
or to do both.
If the transferred item of property, plant
and equipment meets the definition of an
asset, the entity shall measure the cost of
the asset received on initial recognition at
its fair value and consequently the entity
shall recognize revenue in accordance with
IAS 18, “Revenue”. This interpretation
applies prospectively to transfers of assets
or cash from customers received on
or after July 1, 2009. Earlier application
is permitted provided the valuations and
other information needed to apply the
Interpretation to past transfers were
obtained at the time those transfers
occurred. The Company is in the process
of assessing whether there will be any
material changes to its financial statements
upon the adoption of IFRIC 18.
This interpretation has not yet been
endorsed by the EU.
Basis of consolidation
The consolidated financial statements
include the accounts of the Company,
its Operating Subsidiaries, and its
respective interest in associated companies
and jointly controlled entities. Subsidiaries
are consolidated from the date of
acquisition which is considered to be
the date the Company obtains control until
the date control ceases. Control is defined
as the power to govern the financial and
operating policies of an entity, so as to
obtain benefits derived from its activities.
Control is presumed to exist when
the Company holds more than half
of the voting rights.
Associated companies are those companies
over which the Company has the ability
to exercise significant influence on the
financial and operating policy decisions
which are not Operating Subsidiaries.
Generally, significant influence is presumed
to exist when the Company holds more
than 20% of the voting rights.
In addition, jointly controlled entities
are companies over whose activities
the Company has joint control under
a contractual agreement. The consolidated
financial statements include the Company’s
share of the total recognized gains and
losses of associates and jointly controlled
entities on an equity accounted basis from
the date that significant influence
commences until the date significant
influence ceases, adjusted for any
impairment loss. Adjustments to the
carrying amount may also be necessary for
changes in the Company’s proportionate
interest in the investee arising from
changes in the investee’s equity that have
not been recognized in the investee’s profit
or loss. The Company’s share of those
changes is recognized directly in equity.
Other investments are classified as
available-for-sale and are stated at fair
value when their fair value can be reliably
measured. When fair value cannot be
measured reliably, the investments are
carried at cost less impairment.
Intra-company balances and transactions,
including income, expenses and dividends,
are eliminated in the preparation of the
consolidated financial statements.
Gains and losses resulting from
intra-company transactions that are
recognized in assets are eliminated in full.
Minority interests represent the portion
of profit or loss and net assets not held
by the Company and are presented
separately in the statement of income
and within equity in the consolidated
balance sheet.
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2008 Consolidated Financial Statements continued
ArcelorMittal Annual Report 2008