SECURITIES PROSPECTUS

employees based on financial accounting data. The amount of the above-mentionedcontributions accepted for tax purposes shall be calculated in tax ledgers.The reserve for future expenses in connection with the payment of employee vacationallowance, annual long-service award and year-end bonuses shall not be established.All expenses associated with the production and sale not included in direct expensesshall be deemed indirect, with the exception of expenses recognized as non-operatingin accordance with Article 265 of the Tax Code of the Russian Federation. Indirectexpenses shall include expenses in connection with the repair of fixed assets,expenses in connection with voluntary and mandatory property insurance and otherexpenses as specified in the Tax Code of the Russian Federation.Expenses in connection with the repair of fixed assets shall be recognized for taxpurposes in the actual costs for the reporting (tax) period in which they are paid.Expenses in connection with the repair of fixed assets shall be recorded based on datarecognized in the accounting records.Direct expenses shall be fully charged in the current month to services rendered.In the event of sale or any other disposal of securities the expensed value of securitiessold shall be determined based on the production cost per unit.When income is received during several reporting (tax) periods and connectionbetween income and expense may not be determined with certainty or is determinedindirectly, expense allocation shall be adjusted for the principle of even recognition ofincome and expense. Expense related not only to the reporting period income but alsoto future income (expense in connection with the acquisition of rights to use computersoftware and databases, etc) shall be allocated between the reporting and futureperiods. Such allocation shall typically be made in accordance with the procedureapplicable to financial accounting purposes.17.4.3. Tax Accounting for Income and Expense from SalesIncome from the sale of goods (work, services) shall be recognized by type ofactivity.Income from the sale of goods (work, services) shall be recognized as of the day oftransfer of the product ownership right to buyers, the results of work performed orfee-based provision of services to customers determined in accordance with the termsand conditions of the existing agreements.For tax purposes, income from the sale of fixed assets and other property (with theexception of securities) shall be recognized based on financial accounting data net ofthe amounts of tax imposed on buyers and sum differences.236