ANNUAL REPORT 2007 - Uralkali

2.22 Treasury shares
2.23 Dividends
Restoring nature’s balance
uRAlkAli
Where any Group company purchases the company’s equity share capital, the
consideration paid, including any directly attributable incremental costs (net of income
taxes) is deducted from equity attributable to the company’s equity holders until the
shares are cancelled, reissued or disposed of. Where such shares are subsequently sold
or reissued, any consideration received, net of any directly attributable incremental
transaction costs and the related income tax effects, is included in equity attributable
to the company’s equity holders.
Dividends are recognised as a liability and deducted from equity at the balance
sheet date only if they are declared before or on the balance sheet date. Dividends
are disclosed when they are proposed before the balance sheet date or proposed or
declared after the balance sheet date but before the consolidated financial statements
are authorised for issue.
2.24 Value added tax output value added tax is payable to tax authorities on the earlier of (a) collection
of the receivables from customers or (b) delivery of the goods or services to customers.
input VAT is generally recoverable against output VAT upon receipt of the VAT
invoice. The tax authorities permit the settlement of VAT on a net basis. VAT related to
sales and purchases is recognized in the balance sheet on a gross basis and disclosed
separately as an asset and liability. Where provision has been made for impairment
of receivables, impairment loss is recorded for the gross amount of the debtor, including
VAT.
2.25 Borrowings
2.26 Provisions
Borrowings are initially recognized at fair value less transactions costs. Borrowings
are carried at amortised cost using the effective interest method. Borrowing costs are
recognised as an expense on a time proportion basis using the effective interest method.
The Group does not capitalise borrowing costs. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the balance sheet date.
Provisions are recognized when the Group has a present legal or constructive obligation
as a result of past events, and it is probable that an outflow of resources will be
required to settle the obligation, and a reliable estimate of the amount can be made.
Where the Group expects a provision to be reimbursed, for example by a grant from
the local authorities in Berezniki, the reimbursement is recognized as a separate asset
but only when the reimbursement is virtually certain.
Earth replacement costs were accrued specifica lly in relation to cavities resulting from
the extraction of ore beneath the town of Berezniki during mining activities (Note 5).
The Group made no provision for warranties based on past experience of zero level
of warranty claims.
2.27 Trade and other payables
Trade payables are accrued when the counterparty performed its obligations under
the contract and are carried at amortised cost using the effective interest method.
Annual report
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