Page 16 - Kitron Annual Report 2011

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Notes to the consolidated financial statements
16
Kitron annual report 2011
IFRS 10, Consolidated financial statements’ builds on
existing principles by identifying the concept of control
as the determining factor in whether an entity should be
included within the consolidated financial statements of
the parent company. The standard provides additional
guidance to assist in the determination of control where
this is difficult to assess. The group is yet to assess
IFRS 10’s full impact and intends to adopt IFRS 10 no
later than the accounting period beginning on or after 1
January 2013.
IFRS 12, ‘Disclosures of interests in other entities’
includes the disclosure requirements for all forms
of interests in other entities, including joint arrange-
ments, associates, special purpose vehicles and other
off balance sheet vehicles The group is yet to assess
IFRS 12’s full impact and intends to adopt IFRS 12
no later than the accounting period beginning on or
after 1 January 2013.
IFRS 13, ‘Fair value measurement’, aims to improve
consistency and reduce complexity by providing a pre-
cise definition of fair value and a single source of fair
value measurement and disclosure requirements for
use across IFRSs. The requirements, which are largely
aligned between IFRSs and US GAAP, do not extend
the use of fair value accounting but provide guidance
on how it should be applied where its use is already re-
quired or permitted by other standards within IFRSs or
US GAAP. The group is yet to assess IFRS13’s full im-
pact and intends to adopt IFRS 13 no later than the ac-
counting period beginning on or after 1 January 2013.
There are no other IFRSs or IFRIC interpretations that
are not yet effective that would be expected to have a
material impact on the group.
Consolidation principles
Subsidiaries
The consolidated financial statements include the
parent company, Kitron ASA, and all its subsidiaries.
Subsidiaries are all units in which the group has a
controlling influence on the unit’s financial and opera-
tional strategy, normally through owning more than
half the voting capital. When determining whether
a controlling influence exists, the effect of potential
voting rights which can be exercised or converted on
the balance sheet date are taken into account. Sub-
sidiaries are consolidated from the time when control
transfers to the group, and de-consolidated when the
control ceases. The purchase method is used to con-
solidate acquired subsidiaries. The acquisition cost
at the transaction date is attributed to the fair value of
assets provided as consideration for the acquisition,
equity instruments issued, liabilities incurred through
the transfer of control and direct transaction costs.
Identifiable assets and debt acquired are recognised
at their fair value at the transaction date, regardless of
possible minority interests. Transaction costs which
exceed the fair value of identifiable net assets in the
subsidiary are carried as goodwill. If the transaction
costs are lower than the fair value of identifiable net
assets in the subsidiary, the difference is recognised
in the profit and loss account at the acquisition date.
Intra-group transactions, balances and unrealised
gains are eliminated. Unrealised losses are eliminated,
but are assessed as an indicator of impairment loss
on the transferred asset. The accounting principles for
subsidiaries have been amended to accord with the
group’s principles.
Associated companies
The group has no joint ventures or associated com-
panies.
Segment reporting
Operating segments are reported in a manner con-
sistent with the internal reporting provided to the
chief operating decision maker. The chief operating
decision maker, who is responsible for allocating re-
sources and assessing performance of the operating
segments are defined as the corporate management.
Translation of foreign currencies
Functional and presentation currencies
The accounts of the individual units are compiled in
the principal currency used in the economic area in
which the unit operates (the functional currency). The
consolidated accounts are presented in NOK, which
is both the functional and the presentation currency
for the parent company.
Transaction and balance sheet items
Transactions in foreign currency are translated to the
functional currency at the exchange rate prevailing
at the transaction date. Currency gains and losses
which arise from the settlement of such transactions,
and when translating monetary items (assets and li-
abilities) in foreign currencies at 31 December at the
exchange rate on the balance sheet date, are recog-
nised in the profit and loss account.
Group companies
The profit and loss statements and balance sheets for
group units (none of which are affected by hyperinfla-
tion) in functional currencies which differ from the pres-
entation currency are translated as follows:
■■
The balance sheet is translated at the closing ex-
change rate on the balance sheet date
■■
The profit and loss statement is translated at the
average exchange rate
■■
Translation differences are recognised directly in
equity and specified separately