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Unformatted text preview: the income statement. For fair
value hedges, the carrying amount of the hedged item is adjusted
for gains and losses attributable to the risk being hedged. The
derivative is also measured at fair value and gains and losses from
both the hedging instrument and the hedged item are recognised in
the income statement.
For fair value hedges relating to items earlier carried at amortised
cost, the adjustment for gains and losses attributable to the risk
being hedged is amortised through the income statement over the
remaining time to maturity. /page 31/
telenor annual report 2011
notes to the financial statements / telenor group The Group discontinues fair value hedge accounting if the hedging
instrument expires or is sold, terminated or exercised, the hedge
no longer meets the criteria for hedge accounting or the Group
revokes the designation. The fair value adjustment to the hedged
object attributable to the risk being hedged at de-designation will
be amortised in the income statement over the remaining time to
Hedges of a net investment
A hedge of a net investment in a foreign operation is accounted
for in a similar way to a cash flow hedge. Foreign exchange gains or
losses on the hedging instrument relating to the effective portion of
the hedge are recognised directly in other comprehensive income
while any foreign exchange gains or losses relating to the ineffective
portion are recognised in the income statement. On disposal of
the foreign entity, the cumulative value of foreign exchange gains
or losses recognised directly in other comprehensive income is
transferred to the income statement.
Current tax assets and liabilities are measured at the amount
expected to be recovered or paid to the tax authorities. Deferred tax
assets and liabilities are calculated using the liability method with
full allocation for all temporary differences between the tax base
and the carrying amount of assets and liabilities in the consolidated
financial statements, including tax losses carried forward. Deferred
tax assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or in respect
of temporary differences associated with investments in subsidiaries,
associates or joint ventures where the timing of the reversal of the
temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future. For undistributed earnings in subsidiaries deferred tax is provided for
to the extent it is expected that retained earnings will be distributed
in the foreseeable future. For undistributed earnings in associated
companies, deferred tax is provided for because the Group cannot
control the timing of the reversal of the temporary differences.
Deferred taxes are calculated on undistributed earnings in foreign
subsidiaries and associated companies based on the estimated
taxation on transfer of funds to the parent company, based on the
enacted tax rates and regulation as of the end of the reporting
The Group includes deductions for uncertain tax positions when it
is probable that the tax position will be sustained in a tax review.
The Group records provisions relating to uncertain or disputed
tax positions at the amount expected to be paid. The provision is
reversed if the disputed tax position is settled in favour of the Group
and can no longer be appealed.
Deferred tax assets are recognised in the statement of financial
position to the extent it is more likely than not that the tax assets will
be utilised. The enacted tax rates at the end of the reporting period
and undiscounted amounts are used.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax
liabilities and the Group is able to and intends to settle its current
tax assets and liabilities on a net basis.
Inventories are valued at the lower of cost or net realisable value for
products that will be sold as a separate item. Inventories that will be
sold as part of a transaction with several items, which is expected to earn net income, are grouped for net realisable evaluation. Cost is
determined using the FIFO or weighted average method.
Costs related to connection fees
Initial direct costs incurred in earning connection fees are deferred
over the same period as the revenue, limited to the amount of
the deferred revenue. Costs incurred consist primarily of the first
payment of distributor commission, costs for credit check, cost
of the SIM card, the cost of the printed new customer information
package, costs of installation work and expenses for order handling.
In most instances, the costs associated with connection fees exceed
the revenues and are expensed as incurred.
Advertising costs, marketing and sales commissions
Advertising costs, marketing and sales commissions are expensed
Property, plant and equipment
Property, plant and equipment are recognised at cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is calcu...
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This document was uploaded on 03/21/2014.
- Spring '14