2011 Annual Report - OTCIQ.com

78 Notes
Foreign currency translation effects that are attributable to
the cost of monetary financial instruments classified as available
for sale are recognized in income. In the case of fairvalue
adjustments of monetary financial instruments and for
non-monetary financial instruments classified as available
for sale, the foreign currency translation effects are recognized
in equity as a component of other comprehensive income.
Foreign-exchange transactions out of the Russian Federation
may be restricted in certain cases.
The following table depicts the movements in exchange rates
for the periods indicated for major currencies of countries
outside the European Monetary Union:
Currencies
ISO
Code
€1, rate at
year-end
€1, annual
average rate
2011 2010 2011 2010
British pound GBP 0.84 0.86 0.87 0.86
Norwegian krone NOK 7.75 7.80 7.79 8.00
Russian ruble RUB 41.77 40.82 40.88 40.20
Swedish krona SEK 8.91 8.97 9.03 9.54
Hungarian forint HUF 314.58 277.95 279.37 275.48
U.S. dollar USD 1.29 1.34 1.39 1.33
Recognition of Income
a) Revenues
The Company generally recognizes revenue upon delivery
of goods to customers or purchasers, or upon completion of
services rendered. Delivery is deemed complete when the
risks and rewards associated with ownership have been transferred
to the buyer as contractually agreed, compensation
has been contractually established and collection of the resulting
receivable is probable. Revenues from the sale of goods
and services are measured at the fair value of the consideration
received or receivable. They reflect the value of the volume
supplied, including an estimated value of the volume supplied
to customers between the date of the last invoice and the end
of the period.
Revenues are presented net of sales taxes, returns, rebates
and discounts, and after elimination of intragroup sales.
Revenues are generated primarily from the sale of electricity
and gas to industrial and commercial customers, to retail
customers and to wholesale markets. Also shown in this line
item are revenues earned from the distribution of electricity
and gas, from deliveries of steam, heat and water, as well as
from proprietary trading.
b) Interest Income
Interest income is recognized pro rata using the effective
interest method.
c) Dividend Income
Dividend income is recognized when the right to receive the
distribution payment arises.
Electricity and Energy Taxes
The electricity tax is levied on electricity delivered to retail
customers and is calculated on the basis of a fixed tax rate
per kilowatt-hour (“kWh”). This rate varies between different
classes of customers. Electricity and energy taxes paid are
deducted from sales revenues on the face of the income statement
if those taxes are levied upon delivery of energy to the
retail customer.
Accounting for Sales of Shares of Subsidiaries or
Associated Companies
If a subsidiary or associated company sells shares to a third
party, leading to a reduction in E.ON’s ownership interest in the
relevant company (“dilution”), and consequently to a loss of
control, joint control or significant influence, gains and losses
from these dilutive transactions are included in the income
statement under other operating income or expenses.
Earnings per Share
Basic (undiluted) earnings per share is computed by dividing
the consolidated net income attributable to the shareholders
of the parent company by the weighted-average number of
ordinary shares outstanding during the relevant period. At E.ON,
the computation of diluted earnings per share is identical to
that of basic earnings per share because E.ON AG has issued
no potentially dilutive ordinary shares.
Goodwill and Intangible Assets
Goodwill
According to IFRS 3, “Business Combinations” (“IFRS 3”), goodwill
is not amortized, but rather tested for impairment at
the cash-generating unit level on at least an annual basis.
Impairment tests must also be performed between these
annual tests if events or changes in circumstances indicate
that the carrying amount of the respective cash-generating
unit might not be recoverable.