Annual report 2012 - Comrod

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Annual report 2012 66/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportNotes parent companyAccounting policiesThe annual accounts have been prepared inaccordance with the provisions of the AccountingAct and generally accepted accounting principlesin Norway.Sales revenueRevenue from services is recognized as servicesare rendered. Interest income is recognized asinterest accrues. Dividend from subsidiaries arerecognized as dividend are earned. Dividend fromothers than subsidiaries is recognized when theshareholders’ right to receive the payment isestablished by the annual general meeting.Classification and measurement of balance sheetitemsCurrent assets and liabilities include itemsdue for payment within one year of the dateof acquisition and items which are part of theoperating cycle. Other items are classified asnon-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-currentliabilities are recognized at nominal value on thedate of commencement. Costs associated withthe bond issue are amortized over the duration ofthe loan using the effective interest method.ReceivablesTrade and other receivables are recognized in thebalance sheet at their nominal value, followingdeductions for provisions for expected losses.Provision for losses is made on the basis of theindividual claims. There is also an unspecifiedprovision to cover expected losses on other tradereceivables.Assets and liabilities in foreign currencyTransactions in foreign currencies are recognizedat the exchange rate in effect at the transactiondate. Monetary items in foreign currency aremeasured using the exchange rate in effect at thebalance sheet date. Currency gains/losses onreceivables/liabilities are classified as financialitems.SharesThe cost method of accounting is used for allshares. Investments in subsidiaries are financedthrough long term loans in the subsidiary’sfunctional currency. Translation effects onthe long term loan are recorded toward theinvestment in the balance sheet as hedging ofnet investment. Tax effects arising from thetranslation effects are recorded towards equity.Share-based paymentSenior executives in the group have receivedoptions to subscribe for shares in the parentcompany. The fair value of the share optionsis measured at the grant date and the costis recognized, together with a correspondingincrease in other paid-in capital, over the66
Annual report 2012 67/92Strategies and values | Group | Parent company | Corporate governance | ContactFinancial statement Notes Auditors reportperiod in which the performance and/or serviceconditions are fulfilled. The fair value is calculatedusing the Black & Scholes model. The employer’scontribution is accrued over the period in whichthe service conditions are fulfilled based on theintrinsic value.Pension expensePensions are accounted for in accordance withIAS 19, and in accordance with the NorwegianLegislation (NRS 6A). Pension costs and benefitobligation are calculated using the straight-linemethod, based on the expected final salary.The calculations are based on a number ofassumptions, including discount rate, futurechanges in salary, pensions and national insurancecontributions, the expected return on plan assetsand actuarial assumptions on mortality and earlyretirement. Plan assets are measured at fair valueand deducted from net pension commitmentsin the balance sheet. Changes in the benefitobligation arising from changes in plan assets aredistributed over the expected remaining serviceperiod. Changes in the benefit obligation and planassets due to the effects of changes in actuarialassumptions (actuarial gains and losses) arerecognized in equity (net after tax).TaxTax expense in the income statement includesincome tax payable for the period and changesin deferred tax assets and liabilities. Deferred taxassets and liabilities is calculated at 28 % basedon the temporary differences between accountingand fiscal values and loss carry forwards at theend of the financial year.Tax-increasing and tax-reducing temporarydifferences which reversed or may reverse in thesame period are offset. Net deferred tax asset isrecognized to the extent that it is probable that itcan be utilized.Interest-bearing loans and borrowing costsLoans are recognized at the initial amountreceived less directly associated transaction costs.In subsequent periods, interest-bearing loans andborrowings are valued at amortized cost usingthe effective interest method. Gains and lossesare recognized in profit or loss when the liabilityis derecognized and through the amortizationprocess. Borrowing costs are recognized as incurred.Cash flow statementThe cash flow statement has been prepared usingthe indirect method. Cash and cash equivalentsinclude cash and bank deposits.Use of estimatesPreparation of the annual financial statementsin accordance with good accounting practicerequires use of estimates and assumptions bymanagement, which affects the income statementand measurement of assets and liabilities, anddisclosures on uncertain assets and obligations atthe balance sheet date.Contingent losses which are probable andquantifiable are expensed as incurred.67
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Annual report 2012 - Comrod

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