Annual Report 2002 - Agfa

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Associates
Associates are those enterprises in which the Group has significant influence, but
not control, over the financial and operating policies. The consolidated financial
statements include the Group’s share of the total recognized gains and losses of
associates on an equity accounting basis, from the date that significant influence
effectively commences until the date that significant influence effectively ceases.
When the Group’s share of losses exceeds the carrying amount of the associate,
the carrying amount is reduced to nil and recognition of further losses is
discontinued except to the extent that the Group has incurred obligations in respect
of the associate.
1. Significant accounting policies
continued
Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealized gains arising on
intra-group transactions, are eliminated in preparing the consolidated financial
statements. Unrealized gains arising from transactions with associates are
eliminated to the extent of the Group’s interest in the enterprise. Unrealized gains
arising from transactions with associates are eliminated against the investment in
the associate. Unrealized losses are eliminated in the same way as unrealized gains
except that they are only eliminated to the extent that there is no evidence
of impairment.
(d) Foreign currency
Foreign currency transactions
In the individual Group companies, transactions in foreign currencies are recorded
at the exchange rate at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at the exchange rate ruling at the
balance sheet date. Foreign exchange differences arising on translation are
recognized in the income statement.
Financial statements of foreign operations
The Group’s foreign operations are not considered an integral part of the Company’s
operations. Accordingly, the assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are translated to Euro
at foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of foreign operations are translated to Euro at the annual average foreign
exchange rates. Foreign exchange differences are recognized directly in equity.
The financial statements of foreign operations in hyperinflationary economies are
translated into the local company’s measurement currency (mostly the USD) as if it
was the operation’s functional currency. As a result, non-monetary assets, liabilities
and related income statement accounts are remeasured using historical rates in
order to produce the same result in terms of the reporting currency that would have
occurred if the underlying transaction was initially recorded in this currency.
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