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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS
→ NOTES : NOTES TO ThE GROuP ACCOuNTING PRINCIPlES ANd METhOdS
Purchases of additional shareholdings in companies where
a controlling interest has already been acquired are recognised
as equity transactions. As a result, the assets and
liabilities are not remeasured at fair value nor are any gains
or losses recognised. Any differences between the cost of
the additional shareholding and the carrying amount of the
net assets on the date of acquisition are directly offset
against the capital attributable to the buyer.
Investments accounted for under the equity method are
treated in accordance with the principles applying to full
consolidation, with existing goodwill being included in the
recognition of the investment, and non-scheduled amortisation
of this goodwill being included in income from associated
companies in the financial result. Any deviating
accounting and measurement methods used in the financial
statements’ underlying equity valuation are retained as long
as they do not substantially contradict METRO GROuP’s uniform
accounting and measurement methods.
Any write-backs or write-downs to shares in consolidated
subsidiaries carried in the individual financial statements
have been reversed.
Intra-Group profits and losses are eliminated, sales revenues,
expenses and income as well as receivables and
liabilities and/or provisions existing among consolidated
subsidiaries are consolidated. Interim results in fixed assets
or inventories resulting from intra-Group transactions are
eliminated unless they are of minor significance. Thirdparty
debt is consolidated to the extent that the prerequisites
for such consolidation are met. In accordance with
IAS 12 (Income Taxes), deferred taxes are recognised for
consolidated transactions.
Currency translation
In the subsidiaries’ separate financial statements, transactions
in foreign currency are valued at the rate prevailing on
the transaction date. Exchange rate fluctuations up to the
closing date are taken into account in the valuation of receivables
and payables in foreign currency. The resulting gains
and losses are recognised in income. Currency translation
differences from receivables and payables in foreign currency,
which must be regarded as a net investment in a foreign
business operation, are reported as reserves retained
from earnings with no effect on net profit.
→ p. 160
The annual financial statements of foreign subsidiaries are
translated into euros according to the functional currency
concept of IAS 21 (The Effects of Changes in foreign
Exchange Rates). The functional currency is defined as the
currency of the primary economic environment of the subsidiary.
Since all consolidated companies operate as financially,
economically and organisationally autonomous entities,
their respective local currency is the functional
currency. Assets and liabilities are therefore converted at
the average exchange rate prevailing on the closing date,
whereas income statement items are translated at the
annual average exchange rate. differences from the translation
of the financial statements of non-German subsidiaries
do not affect income and are shown as a separate item
under reserves retained from earnings. Such currency differences
are recorded as income in the year in which foreign
subsidiaries are deconsolidated.
In the financial year 2010, no functional currency of a consolidated
company was classified as hyperinflationary as
defined by IAS 29 (financial Reporting in hyperinflationary
Economies).
The following exchange rates were applied in the translation
of key currencies outside the European Monetary union that
are of major significance for METRO GROuP: