Note 1 - Beerenberg

Accounting principles
Depreciation
Ordinary depreciation is calculated on a straight-line basis
over the economic useful lives of the non-current assets
based on historical cost. Depreciation is classed as an ordinary
operating expense.
Subsidiary companies
Subsidiaries are measured using the cost method in the
separate financial statements. Investments are measured at
the acquisition cost of the shares unless it has been necessary
to write down their value. They are written down to fair value
when the fall in value is due to other-than-temporary circumstances
and it is deemed necessary in accordance with generally
accepted accounting practices. Write-downs are reversed
when the basis for a write-down is no longer present.
Inventories and cost of sales
Inventories are measured at an amount equal to the lower of
cost and estimated selling price. The cost of manufactured
inventories includes the direct cost of materials, direct labour
and a share of indirect production overheads, while the
cost of purchased inventories is the acquisition cost. Cost of
sales for the year comprises the cost price of goods sold plus
any write-down in accordance with generally accepted accounting
practices at the end of the year.
Construction contracts
The company’s operations mostly comprise construction
assignments (projects) lasting from a few months to several
years. Billing takes place monthly and normally in step with
the progress of the work.
Revenue from projects is recognised as and when services
are rendered. This implies that revenue is recognised in accordance
with the stage of completion as and when work is
completed. It means that the accrued part of the expected
earnings from a project is recognised as revenue. The stage of
completion is assessed on the basis of production completed.
For projects expected to incur a loss, all of the expected
loss is recognised as an expense. The warranty period is
normally three years, and provisions for probable warranty
work are recognised under cost of sales as and when they are
made. Disputed claims are only recognised as revenue once
they have been settled or become certain.
Receivables
Receivables are presented at face value less expected losses.
Currency
Monetary items in foreign currencies are measured using
the exchange rate at the end of the accounting year.
Use of estimates
Preparing the financial statements in accordance with generally
accepted accounting practices requires the management
to use assessments and assumptions that affect the
income statement and the valuation of assets and liabilities
as well as information about uncertain assets and liabilities
on the reporting date.
Contingent losses that are probable and quantifiable are
recognised as an expense as incurred.
Pension obligations and pension costs
Employee benefits in the form of pension schemes are accounted
for in accordance with NRS 6 and calculated in
accordance with International Accounting Standard (IAS)
19 “Employee benefits”. Pensions are described in Note 6.
The net pension cost for the period is classed as a salary and
personnel expense.
The company operates a pension scheme financed by
contributions paid into a separate legal entity (insurance
company) in the form of a defined contribution plan. A defined
contribution plan is a pension scheme under which the
company pays fixed contributions to the insurance company.
The company has no further payment obligations once the
contributions have been paid. The contributions are recognised
in profit or loss as salary costs as incurred. Prepaid
contributions are recognised as assets to the extent that they
can be refunded or reduce future contributions.
The group has one employee with an ordinary defined benefit
plan, and it is also a member of an AFP defined benefit
scheme. A defined benefit plan is a pension scheme that is not
contribution-based. Net liabilities for defined benefit plans
are calculated for each scheme by estimating future benefits
accrued by the employees for services given in the current
or previous periods. The benefits are discounted to calculate
their present value, and the cost of pension accruals from
previous periods that have not yet been recognised and the
fair value of plan assets are deducted.
Changes to defined benefit pension obligations caused by
changes to the pension plans are distributed over the estimated
average remaining contribution period.
Beerenberg CORP. AS Annual accounts 2012
79