SECURITIES PROSPECTUS

apply to promissory notes and the original value of financial investments purchased first(FIFO method) shall apply to shares and bonds.6.5. For subsequent valuation purposes, financial investments shall be divided intotwo groups: financial investments whose current market value can be determined inaccordance with the procedure specified in these Regulations and financial investmentswhose current market value can not be determined.The value of financial investments whose current market value can be determinedin accordance with the approved procedure shall be adjusted on an annual basis as of theaccounting year-end.Current market value shall apply to the valuation of debt securities.6.6. Contributions to the authorized (share) capitals of other entities shall berecognized as financial investments of the organization and recorded in the accountingbooks as the equivalent of actual costs incurred by the investor, i.e. at the value ofcontributed assets at which they are recorded in the balance sheet of the investor.6.7. The Company shall establish a reserve against the depreciation of financialinvestments in the event of sustainable significant reduction in their value. Reserve shallbe formed as of the final date of the reporting year in accordance with the procedureprovided for by AR (Accounting Regulations) 19/02 and in conformity with thecalculation provided by the function of the Company accountable for calculation.6.8. Interest (coupon yield, discount) on securities shall be accrued for each ofprevious reporting years in accordance with the terms and conditions of the agreementand shall be recorded as other income (expense).6.9. The discount value of extended loans shall not be calculated by the Company.6.10. All costs directly associated with the acquisition of assets as financialinvestments irrespective of their amount shall be included in the original value offinancial investments.6.11. The value of shares in newly established entities in the reorganizationthrough a spin-off or demerger received by JSC IDGC Holding shall be determined inthe accounting records in accordance with the procedure for tax accounting set forth inparagraph 17.4.6.7. Inventory Accounting7.1. Inventory accounting records shall be maintained in accordance withamended AR (Accounting Regulations) 5/01 approved by Decree of the Ministry ofFinance of the Russian Federation No. 44n, dated June 9, 2001.7.2. Inventory launched into production, used for repair operations, capitalconstruction or disposed of in any other manner shall be valued at the production cost of226