Annual report 2008 - Comrod

NOTES PARENT COMPANYAccounting policiesThe annual accounts have been prepared in accordancewith the provisions of the Norwegian Accounting Actand generally accepted accounting principles in Norway.Sales revenueRevenue from services is recognized as services arerendered. Interest income is recognized as interestaccrues. Dividend from subsidiaries are recognizedas dividend are earned. Dividend from others thansubsidiaries is recognized when the shareholders’ rightto receive the payment is established by the annualgeneral meeting.Classification and measurement of balance sheet itemsCurrent assets and liabilities include items due forpayment within one year of the date of acquisition anditems which are part of the operating cycle. Other itemsare classified as non-current assets/liabilities.Current assets are measured at the lower of costof acquisition and fair value. Current liabilitiesare recognized at nominal value on the date ofcommencement.Non-current assets are measured at the cost ofacquisition, but are written down to fair value ifimpairment is identified which is not consideredto be of a temporary nature. Non-current liabilitiesare recognized at nominal value on the date ofcommencement. Costs associated with the bond issueare amortized over the duration of the loan using theeffective interest method.ReceivablesTrade and other receivables are recognized in thebalance sheet at their nominal value, followingdeductions for provisions for expected losses. Provisionfor losses is made on the basis of the individual claims.There is also an unspecified provision to cover expectedlosses on other trade receivables.Assets and liabilities in foreign currencyTransactions in foreign currencies are recognized atthe exchange rate in effect at the transaction date.Monetary items in foreign currency are measured usingthe exchange rate in effect at the balance sheet date.Currency gains/losses on receivables/liabilities areclassified as financial items.SharesThe cost method of accounting is used for all shares.Investments in subsidiaries are financed through longterm loans in the subsidiary’s functional currency.Translation effects on the long term loan are recordedtoward the investment in the balance sheet ashedging of net investment. Tax effects arising from thetranslation effects are recorded towards equity.Share-based paymentSenior executives in the group have received optionsto subscribe for shares in the parent company. Thefair value of the share options is measured at thegrant date and the cost is recognized, together with acorresponding increase in other paid-in capital, overthe period in which the performance and/or serviceconditions are fulfilled. The fair value is calculated usingthe Black & Scholes model. The employer’s contributionis accrued over the period in which the serviceconditions are fulfilled based on the intrinsic value.Pension expensePensions are accounted for in accordance with NRS 6A,Applying IAS 19 under Norwegian Legislation. Pensioncosts and benefit obligation are calculated using thestraight-line method, based on the expected final salary.The calculations are based on a number of assumptions,including discount rate, future changesin salary, pensions and national insurance contributions,the expected return on plan assets and actuarialassumptions on mortality and early retirement. Planassets are measured at fair value and deducted from netpension commitments in the balance sheet. Changes inthe benefit obligation arising from changesin plan assets are distributed over the expectedremaining service period. Changes in the benefitobligation and plan assets due to the effects of changesin actuarial assumptions (actuarial gains and losses) arerecognized in equity (net after tax).TaxTax expense in the income statement includes incometax payable for the period and changes in deferredtax. Deferred tax is calculated at 28 % based on thetemporary differences between accounting and fiscalvalues and loss carry forwards at the end of the financialyear.Comrod Communication Group Annual report 2008 71