Ardagh Glass Finance plc - Irish Stock Exchange

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
(a) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the
accounting policy stated. The recoverable amounts of cash-generating units have been determined
based on value-in-use calculations.
These calculations require the use of estimates as outlined in Note 8.
(b) Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required
in determining the worldwide provision for income taxes. There are many transactions and calculations
for which the ultimate tax determination is uncertain during the ordinary course of business. The
Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional
taxes will be due. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the income tax and deferred tax provisions in the period
in which such determination is made.
The Group recognises tax assets where there is a reasonable expectation that the assets will be
recovered. The assessment of the recoverability of deferred tax assets involves significant judgement.
The main deferred tax asset recognised by the Group relates to unused tax losses. The Directors assess
the recoverability of tax losses by reference to future profitability and Group tax planning.
(c) Revenue recognition
The Group uses the percentage-of-completion method in accounting for its sales of glass
technology services. Use of the percentage-of-completion method requires the Group to estimate the
services performed to date as a proportion of the total services to be performed.
(d) Measurement of defined benefit obligations
The Group follows the guidance of IAS 19 to determine the present value of its obligations to
current and past employees in respect of defined benefit pension obligations and other long term
employee benefits, which are subject to similar fluctuations in value in the long term. The Group uses a
network of professional actuaries co-ordinated under a worldwide process to value such liabilities
designed to ensure consistency in the quality of the key assumptions underlying the valuations. The
critical assumptions and estimates applied are discussed in detail in Note 18.
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