The Benetton Group Annual Report 1996

Differences which do not have an effect on net income and stockholders’ equity
(J) Amortization of License
As discussed in Note 4 the Group is not amortizing certain license costs, as the amounts will be fully
recoverable upon disposal of the underlying assets.
Under US generally accepted accounting principles, such amounts would be amortized over the life of
the license. No adjustment has been made for this item in the accompanying reconciliation, as the
amounts involved are not significant.
(K) Transactions in foreign currencies
As discussed in Note 4, the Group records income, relating to forward exchange contracts that were
subsequently renegotiated, on the date of renegotiation.
Under US GAAP, only the m.t.m. at the balance sheet date would be recorded in the consolidated
statement of income. No adjustment has been made for this item in the accompanying reconciliation,
as the amounts are not deemed material.
(l)Purchases and Sales with Parent Company
As mentioned in section (b) of Note 32, under US GAAP transaction between a “controlled group”
should not result in gains or losses, or increases in asset carrying values. During 1996, the Group
purchased Benetton Gesfin S.p.A. (formely Schemaventi S.p.A.) from Edizione Holding S.p.A. and third
parties.
The Group recorded a deferred tax asset related to the excess of purchase price over net equity (Lire
2,495 million). In the US GAAP stockholder’s equity reconciliation, the Group has reduced stockholder’s
equity for the amount of the excess related to Edizione Holding. The remaining amount (Lire 1,057
million) related to third parties shoud be classified as goodwill and not a deferred tax asset for US GAAP.
(m) Traslation differences
The Group has recorded an additional deferred tax liability (Lire 484 million) for translation differences
arising from the current year translation of foreign deferred taxes. A deferred tax liability would not be
recorded under US GAAP.