Annual Report 2010 - CDON Group

CDON Group AB
Annual Årsredovisning report 2010 2010
Group contributions that are the equivalent of a dividend are recognised as a dividend. This means that the Group contributions
received and their tax effects are recognised in the income statement. Group contributions provided and their current tax effects
are recognised directly against retained profits.
Group contributions that are the equivalent of shareholder contributions are recognised by the recipient directly against retained
profits with consideration given to the current tax effect. The issuer reports Group contributions and their current tax effects as an
investment in participations in subsidiaries, unless impairment is needed.
Note 3 Estimates and assessments
Preparation of the financial statements using IFRS requires that the Board and company management make assessments, estimates,
and assumptions that affect application of the accounting policies and the recognised amounts of assets, liabilities, income, and
expenses. These estimates and assumptions are based on historic experience and several other factors that are judged to be
reasonable taking current conditions into consideration. Resulting estimates and assumptions are used to determine the estimated
value of assets and liabilities that are not otherwise clear from other sources. The actual outcome may differ from these estimates
and assessments.
The estimates and assumptions are reviewed regularly. Changes to estimates are recognised in the period when the change is made
– if the change only affected that period. If the change affects current and future periods, it is recognised in the period when the
change is made and in future periods. The development, selection of, and disclosures regarding the Group’s significant accounting
policies and estimates, and the application of these policies and estimates, are reviewed by the CDON Group’s Audit Committee.
Key sources of uncertainties in estimates
Note 9 contains information about the assumptions and risk factors regarding impairment testing of goodwill and other intangible
assets with indefinite useful lives. Note 17 includes a description of provisions made.
Goodwill and other intangible non-current assets
Goodwill and other intangible assets with indefinite useful lives are tested annually for impairment or when evidence demonstrates
a need for impairment. The impairment test requires that management determines the fair value of cash-generating units on the
basis of projected cash flows and internal business plans and forecasts. For additional information, see Note 9 Intangible assets.
Obsolescence assessment of inventories
Inventories are reviewed monthly to determine possible impairment. An impairment loss is reported in cost of goods sold at the
amount which, after careful evaluation, the inventory is considered obsolete. If true obsolescence differs from estimates or if
management makes future adjustments to the assumptions, changes in valuation can affect the period’s earnings and financial
position.
Provisions and contingent liabilities
Liabilities are recognised when there is a present obligation as a result of a past event, when it is probable that an outflow of
economic benefits will occur and a reliable assessment of the amount can be made. In these cases, a calculation of the provision is
made and recognised in the statement of financial position. A contingent liability is recognised in the notes when a possible
obligation is incurred, but whose existence can only be confirmed by one or more uncertain future events beyond the Group’s
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