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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS
→ NOTES : NOTES TO ThE GROuP ACCOuNTING PRINCIPlES ANd METhOdS
Deferred taxes
Deferred taxes are determined in accordance with IAS 12,
according to which likely future tax benefits and liabilities
are recognised for temporary differences between the carrying
amounts of assets or liabilities in the consolidated financial
statements and their tax base. Anticipated tax savings
from the use of tax loss carry-forwards expected to be
recoverable in future periods are capitalised.
deferred tax assets in respect of deductible temporary differences
and tax loss carry-forwards exceeding the deferred
tax liabilities in respect of taxable temporary differences
are recognised only to the extent that it is probable that taxable
profit will be available against which the deductible
temporary differences can be utilised.
deferred tax assets and deferred tax liabilities are netted if
these income tax assets and liabilities concern the same tax
authority and refer to the same tax subject or a group of
different tax subjects that are jointly assessed for income
tax purposes.
Inventories
In accordance with IAS 2 (Inventories), merchandise carried
as inventories is reported at cost of purchase. The cost of
purchase is determined either on the basis of a separate
valuation of additions from the perspective of the procurement
market or by means of the weighted average cost
method.
Merchandise is valued as of the closing date at the lower of
cost or net realisable value. Merchandise is written down on
a case-by-case basis if the anticipated net realisable value
declines below the carrying amount of the inventories. Such
net realisable value corresponds to the anticipated estimated
selling price less the estimated direct costs necessary
to make the sale.
When the reasons for a write-down of the merchandise have
ceased to exist, the write-down is reversed.
Trade receivables
In accordance with IAS 39, trade receivables are classified
as “loans and receivables” and recognised at amortised
cost. Where their recoverability appears doubtful, the trade
receivables are recognised at the lower recoverable amount.
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Aside from the required specific bad debt allowances, a
lump-sum bad debt allowance is carried out to account for
the general credit risk.
Other receivables and assets
The other financial assets in the other receivables and assets
item that are classified as “loans and receivables” under IAS
39 are recognised at amortised cost.
The deferred income item comprises transitory deferrals.
Other assets include investments and derivative financial
instruments to be classified as “held for trading” in accordance
with IAS 39. They are recognised at their fair value,
which corresponds to the cost of purchase net of transaction
costs, for the first recognition period. Where the fair values
of these financial instruments can subsequently be reliably
determined, such fair values are carried. Where no active
markets exist and the fair values cannot be determined
without undue effort, the assets are carried at cost. All other
receivables and assets are also recognised at amortised
cost.
If there are any indications of impairment, the assets will
be tested for impairment and, if necessary, written down
by way of non-scheduled depreciation. When the reasons
for the write-down have ceased to exist, the write-down is
reversed.
Deferred income tax assets and liabilities
The disclosed deferred income tax assets and liabilities
concern domestic and foreign income taxes for the reporting
year as well as prior years. They are determined in compliance
with the tax laws of the respective business country.
Cash and cash equivalents
Cash and cash equivalents comprise cheques, cash on hand
and bank deposits with a term of up to three months and are
recognised at their respective nominal values.
Provisions
The actuarial measurement of pension provisions for company
pension plans is effected in accordance with the projected
unit method stipulated by IAS 19 (Employee Benefits).
This method takes account of pensions and pension entitlements
known at the closing date as well as of future pay and