Financial Statements - Solvay

64
Solvay Global Annual Report 2008
5. Retirement benefi t costs
The Group operates a number of defi ned benefi t and
defi ned contribution retirement benefi t plans. Payments to
defi ned contribution retirement benefi t plans are charged
as an expense as they fall due.
The Group’s commitments under defi ned benefi ts plans,
and the related costs, are valued using the “projected unit
credit method” in order to determine the present value of
the obligation at closing date.
The amount recorded in the balance sheet represents
the present value of the defi ned benefi t obligations,
adjusted for actuarial differences, for unrecognized past
service costs and for the fair value of external plan assets,
limited in the case of a surplus to the present value of
available refunds and/or reductions in future contributions.
Actuarial differences exceeding the higher of 10 % of
the present value of the retirement benefi t obligations
and 10 % of the fair value of the assets of the external
plan assets at balance sheet closing date are amortized
over the expected average remaining working life of
the participating employees.
6. Non-recurring items
Non-recurring items mainly include:
• gains and losses on the sale of subsidiaries, jointventures,
affi liates accounted for under the equity
method that do not qualify as discontinued operations,
and available-for-sale investments; gains and losses on
the sale of real estate not directly linked to an operating
activity;
• restructuring charges associated with the shutdown of
an activity;
• impairment of tangible assets, intangible assets and
goodwill associated with the shutdown of an activity and/
or a restructuring plan;
• the impact of signifi cant litigation.
7. Income taxes
Income taxes on profi ts for the period include both
current and deferred taxes. They are recorded in
the income statement except where they relate to items
recorded directly in equity, in which case they too are
recorded in equity.
Current taxes are taxes payable on the taxable profi t
for the period, calculated at the tax rates prevailing
at the balance sheet closing date, as well as adjustments
relating to previous periods.
Deferred tax assets and liabilities are required to be
measured at the tax rates that are expected to apply to
the fi nancial year in which the asset is realized or the liability
is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax liabilities relating to subsidiaries’ profi ts that
the Group does not intend distributing in the foreseeable
future are not accounted for.
Deferred tax assets are recognized only where taxable
profi ts are likely to be realized, against which the deferred
tax assets will be imputed.
8. Tangible and intangible assets
Tangible and intangible assets are carried at their historical
cost less depreciation/amortization. Depreciation/
amortization is included in the income statement under
cost of goods sold, commercial and administrative costs,
and in R&D costs.
Depreciation/amortization is calculated on a straight-line
basis, according to the useful life listed below:
Buildings 30 years
IT equipment 3 - 5 years
Machinery and equipment 10 - 20 years
Transportation equipment 5 - 20 years
Development costs 2 - 5 years
Patents, trademarks
and other intangible assets
5 - 20 years
Assets held under fi nance leases are initially recognized as
assets at the lower of their fair value or the present value
of the minimum lease payments related to the contracts.
The corresponding liability is included in fi nancial debts.
Financial charges, representing the difference between
the full amount of the lease obligations and the fair
value of the assets acquired, are charged to the income
statement over the duration of the contract. Agreements
not in the legal form of a lease contract are analyzed
with reference to IFRIC 4 to determine whether or not
they contain a leasing contract to be accounted for
in accordance with IAS 17.
Borrowing costs directly attributable to the acquisition,
construction or production of an asset requiring a long
preparation period are added to the cost of this asset until
it is ready for use.
Grants for the purchase of assets are recorded net of
the value of these assets.