Page 15 - Kitron Annual Report 2011

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Notes to the consolidated financial statements
The most significant accounting principles applied
in the preparation of the consolidated financial state-
ments are detailed below. These principles have been
applied uniformly in all the periods unless otherwise
Basis for preparations
The consolidated financial statements for Kitron ASA
have been prepared in accordance with “International
Financial Reporting Standards” (IFRS) as approved by
the European Union (EU). The consolidated financial
statements have been prepared in accordance with
the historical cost convention. Preparing the financial
statements in accordance with the IFRS requires the
use of estimates. Application of the company’s ac-
counting principles also means that the management
must exercise discretion. Areas where such discre-
tionary assessments have been made to a particular
extent or which have a high degree of complexity, or
where assumption and estimates are significant for
the consolidated accounts, are described in note 4.
Changes in accounting policy
and disclosures
a) New and amended standards adopted by the group
There are no IFRSs or IFRIC interpretations that are
effective for the first time for the financial year begin-
ning on or after 1 January 2011 that would be ex-
pected to have a material impact on the group.
(b) New standards, amendments and interpreta-
tions issued but not effective for the financial year
beginning 1 January 2011 and not early adopted
IAS 19, ‘Employee benefits’ was amended in June
2011. The impact on the group will be as follows:
to eliminate the corridor approach and recognise all
actuarial gains and losses in OCI as they occur; to
immediately recognise all past service costs; and to
replace interest cost and expected return on plan as-
sets with a net interest amount that is calculated by
applying the discount rate to the net defined benefit
liability (asset). The group is yet to assess the full im-
pact of the amendments.
IFRS 9, ‘Financial instruments’, addresses the clas-
sification, measurement and recognition of financial
assets and financial liabilities. IFRS 9 was issued in
November 2009 and October 2010. It replaces the
parts of IAS 39 that relate to the classification and
measurement of financial instruments. IFRS 9 requires
financial assets to be classified into two measurement
categories: those measured as at fair value and those
measured at amortised cost. The determination is
made at initial recognition. The classification depends
on the entity’s business model for managing its finan-
cial instruments and the contractual cash flow char-
acteristics of the instrument. For financial liabilities,
the standard retains most of the IAS 39 requirements.
The main change is that, in cases where the fair value
option is taken for financial liabilities, the part of a fair
value change due to an entity’s own credit risk is re-
corded in other comprehensive income rather than the
income statement, unless this creates an accounting
mismatch. The group is yet to assess IFRS 9’s full im-
pact and intends to adopt IFRS 9 no later than the ac-
counting period beginning on or after 1 January 2015.
Note 2 Summary of the most
significant accounting principles
Kitron ASA and its subsidiaries (the group) comprise
one of Scandinavia’s leading enterprises in the devel-
opment, industrialisation and manufacturing of elec-
tronics for the energy/telecoms, defence/aerospace,
offshore/marine, medical equipment and industry seg-
ments. The group has operations in Norway, Sweden,
Lithuania, Germany, US and China. Kitron ASA has its
head office at Billingstad outside Oslo in Norway and
is listed on the Oslo Stock Exchange. The consoli-
dated accounts were considered and approved by the
company’s board of directors on 20 March 2012.
Note 1 General information
Notes to the consolidated
financial statements