AstraZeneca Annual Report and Form 20-F Information 2011

Financial StatementsCompany Accounting PoliciesBasis of accountingThe Company Financial Statements are prepared under the historicalcost convention, modified to include revaluation to fair value of certainfinancial instruments as described below, in accordance with theCompanies Act 2006 and UK Generally Accepted Accounting Practice(UK GAAP). The Group Financial Statements are presented on pages142 to 191 and have been prepared in accordance with InternationalFinancial Reporting Standards as adopted by the EU and as issued bythe IASB and in accordance with the Group Accounting Policies setout on pages 146 to 149.The following paragraphs describe the main accounting policies underUK GAAP, which have been applied consistently.New accounting standardsThe Company has adopted the Amendments to FRS 25 (IAS 32)‘Financial Instruments: Presentation Classification of Rights Issues’,Abstract 47 ‘Extinguishing Financial Liabilities with Equity Instruments’and ‘Improvements to Financial Reporting Standards 2010’ (November2010) during the year. The adoptions had no impact on the net resultsor net assets of the Company.The Amendments to FRS 29 (IFRS 7) ‘Disclosures – Transfers ofFinancial Assets’ has been issued but not yet adopted by the Company.Foreign currenciesProfit and loss account items in foreign currencies are translatedinto US dollars at average rates for the relevant accounting periods.Assets and liabilities are translated at exchange rates prevailing at thedate of the Company Balance Sheet. Exchange gains and losses onloans and on short-term foreign currency borrowings and depositsare included within net interest payable. Exchange differences on allother transactions, except relevant foreign currency loans, are takento operating profit.TaxationThe charge for taxation is based on the result for the year and takesinto account taxation deferred because of timing differences betweenthe treatment of certain items for taxation and for accounting purposes.Full provision is made for the effects of these differences. Deferred taxassets are recognised where it is more likely than not that the amountwill be realised in the future. These estimates require judgements tobe made including the forecast of future taxable income. Deferred taxbalances are not discounted.Accruals for tax contingencies require management to makejudgements and estimates in relation to tax audit issues. Tax benefitsare not recognised unless the tax positions will probably be sustained.Once considered to be probable, management reviews each materialtax benefit to assess whether a provision should be taken against fullrecognition of that benefit on the basis of potential settlement throughnegotiation and/or litigation.Any recorded exposure to interest on tax liabilities is provided for in thetax charge. All provisions are included in creditors due within one year.InvestmentsFixed asset investments, including investments in subsidiaries, arestated at cost and reviewed for impairment if there are indications thatthe carrying value may not be recoverable.Share-based paymentsThe issuance by the Company to employees of its subsidiaries ofa grant over the Company’s options represents additional capitalcontributions by the Company to its subsidiaries. An additionalinvestment in subsidiaries results in a corresponding increase inshareholders’ equity. The additional capital contribution is based onthe fair value of the grant issued, allocated over the underlying grant’svesting period.Financial instrumentsLoans and other receivables are held at amortised cost. Long-termloans payable are held at amortised cost.LitigationThrough the normal course of business, the AstraZeneca Group isinvolved in legal disputes, the settlement of which may involve costto the Company. Provision is made where an adverse outcome isprobable and associated costs can be estimated reliably. In othercases, appropriate descriptions are included.194 Financial StatementsAstraZeneca Annual Report and Form 20-F Information 2011