Open Joint Stock Company Gazprom

OAO GAZPROMNOTES TO THE IAS CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(In millions of Russian Roubles in terms of the equivalent purchasing power of the Rouble at31 December 2001, except as noted)3 BASIS OF PRESENTATION—(Continued)The financial statements of the Group's subsidiaries and associated undertakings resident in theRussian Federation, which account for substantially all the assets and liabilities of the Group, are basedon their statutory records, which are maintained under the historical cost convention with adjustmentsand reclassifications recorded in the financial statements for the purpose of fair presentation inaccordance with IAS. Similar adjustments are recorded in the financial statements in respect of Groupcompanies not resident in the Russian Federation.The preparation of consolidated financial statements in conformity with IAS requiresmanagement to make estimates and assumptions that affect the reported amounts of assets, liabilities,revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results coulddiffer from those estimates.The adjustments and reclassifications made to the statutory accounts for the purpose of IASreporting include the restatement for changes in the general purchasing power of the Russian Rouble("RR") in accordance with IAS 29, "Financial Reporting in Hyperinflationary Economies" ("IAS 29") (seeNote 28).These statements are prepared in accordance with all International Accounting Standardseffective for financial statements covering periods ended 31 December 2000.ReclassificationsMinor reclassifications have been made to certain prior year balances to conform to the currentyear presentation.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe principal accounting policies followed by the Group are set out below.ConsolidationSignificant subsidiary companies in which the Group, directly or indirectly, has an interest of morethan 50% of the voting rights or is otherwise able to exercise control over the operations have beenconsolidated. Subsidiaries are consolidated from the date on which effective control is transferred andare no longer consolidated from the date of disposal. All intercompany transactions, balances andunrealised surpluses and deficits on transactions between group companies have been eliminated.Separate disclosure is made of minority interests.Acquisitions of subsidiaries are recorded in accordance with the purchase accounting method.The consolidated financial statements of the Group reflect the results of operations of any subsidiariesacquired from the date control is established.Assets and liabilities of subsidiaries acquired are restated to comply with uniform Groupaccounting policies. Any excess of the cost of an acquisition over the fair value of the Group's share ofthe identifiable net assets of the acquired subsidiary/associated undertaking at the date of acquisitionis recorded as goodwill. In respect of associates, goodwill is included in investments in associatedundertakings.F-9