REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

20. FINANCIAL INFORMATION CONCERNING THE COMPANY’S ASSETS AND LIABILITIES,
FINANCIAL POSITION AND PROFITS AND LOSSES
20.1 CONSOLIDATED FINANCIAL STATEMENTS FOR 2007, 2006 AND 2005
Loans and receivables are also measured at amortized cost, with gains and losses recognized in the income
statement.
The Group’s other investments are classified as available-for-sale financial assets and are measured at fair value.
Changes in the fair value of available-for-sale financial assets are recognized directly in equity. When a decline
in the fair value of an available-for-sale financial asset has been recognized directly in equity and there is
objective evidence that the asset is impaired, the cumulative loss that had been recognized directly in equity is
removed from equity and recognized in the income statement.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out
(FIFO) method.
Receivables
Receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective
interest method. The fair value of short-term receivables with no stated interest rate is measured at the original
invoice amount if the effect of discounting is immaterial.
A provision for impairment of trade receivables is established when there is objective evidence that the Group
will not be able to collect all amounts due according to the original terms of the receivables. The likelihood of
collection is estimated based on the best possible assessment of the risk of non-recovery of the receivable
concerned.
Deferred taxes
Deferred taxes are recognized using the liability method for all temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
However, deferred taxes are not accounted for if they arise from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither accounting nor
taxable profit. Deferred taxes are determined using tax rates (and laws) that have been enacted or substantially
enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the
deferred tax liability is settled.
Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilized.
Deferred taxes are recognized on temporary differences arising on investments in subsidiaries and associates,
except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable
that the temporary difference will not reverse in the foreseeable future.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, short-term investments with
original maturities of three months or less and highly-liquid investments in money-market mutual funds. Shortterm
investments are marked-to-market at each balance sheet date.
Bank overdrafts are classified as current financial liabilities.
Own shares
Own shares held are recognized as a deduction from equity based on their acquisition cost. Gains and losses on
the disposal of own shares held are also recorded in equity.
120 - Iliad – Registration Document 2007