Report of the Supervisory Board - tuv nord italia

Deferred tax is shown in the consolidated
financial statements in accordance with
Article 306 HGB. Deferred tax assets or liabilities
arising from consolidation measures
affecting earnings are determined using
the individual tax rates applicable to the
companies concerned, and carried forward
accordingly.
4. Accounting and
valuation methods
The accounting and valuation methods
applied are indicated in detail below.
Assets
Non-current assets
Intangible assets purchased are accounted
for at cost and subjected to scheduled
amortisation over their useful lives using the
straight-line method. In the case of software,
the useful life is generally put at between one
and four years.
Property, plant and equipment are valued at
cost and, where subject to attrition, are depreciated
in accordance with their expected
useful lives. The useful lives of buildings are
assessed in accordance with Sec. 7 (4) of
the Income Tax Act (EStG), and those for
other tangible assets that are subject to attrition
in accordance with the Federal Ministry
of Finance’s depreciation tables for assets in
general use.
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Non-movable assets are depreciated using
the straight-line method, and movable assets
are depreciated using the straight-line or
reducing-balance method. Where the
reducing-balance method of depreciation is
applied, the highest rates permissible for tax
purposes are used. The reducing-balance
method is replaced by the straight-line
method of depreciation in the year in which
the straight-line depreciation amount exceeds
that of the reducing-balance method.
Low-value items are written down in full in
the year of acquisition and shown as disposals.
Within the financial assets, shares in nonconsolidated
affiliated companies and other
shareholdings are recognised at cost or
at their lower attributable fair value. Material
shareholdings in associated companies
are accounted for on the basis of the equity
share as at the balance sheet date of
1 January 2004.
The other loans are recognised at their nominal
value. Claims arising from reinsurance
are capitalised at the nominal value of the
shares in the guarantee funds: they are not
depreciated to their surrender values.
Current assets
Inventories are valued at the lower of purchase
or manufacturing cost, or net realisable
value at the balance sheet date.
Raw materials and supplies are recognised
at their average purchase cost on the basis
of the lowest value principle. Downward
valuation adjustments are implemented for
obsolete and non-moving items.