Page 55 - Kitron Annual Report 2011

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Notes to the financial statements Kitron ASA
Accounting principles
The annual financial statements have been prepared
in accordance with the Norwegian Accounting Act
and Norwegian generally accepted accounting princi-
ples (NGAAP). All amounts are in NOK 1 000 unless
otherwise stated.
Revenue recognition
Income from the sale of goods and services is recog-
nised at the time of delivery.
Classification and recognition of assets and
liabilities
Assets intended for long-term ownership or use are
classified as fixed. Other assets are classified as cur-
rent. Accounts receivable which fall due within one
year are always classified as current assets. Analogue
criteria are applied in classifying liabilities. Current as-
sets are recognised at the lower of cost price and fair
value. Current liabilities are recognised in the balance
sheet at the nominal value on the establishment date.
Fixed assets are recognised at their acquisition cost.
Tangible fixed assets which decline in value are depre-
ciated on a straight-line basis over their expected useful
lifetime. Fixed assets are written down to their fair value
where this is lower than the cost price and the decline
in value is not considered to be temporary. Long-term
debt in Norwegian kroner, with the exception of other
provisions, is recognised at the nominal value on the
establishment date. Provisions are discounted if the
interest element is significant.
Intangible fixed assets
Intangible fixed assets, excluding deferred tax benefit, con-
sist of goodwill and activated costs. Goodwill is amor­tised
on a straight-line basis over its expected useful life.
Tangible fixed assets
Tangible fixed assets are recognised in the balance
sheet and depreciated on a straightline basis over
their expected useful lifetime if they have an expected
lifetime of more than three years and a cost price
which exceeds NOK 15 000. Maintenance costs for
tangible fixed assets are recognised as an operating
expense as they arise, while upgrades or improve-
ments are added to the cost price of the asset and
depreciated accordingly. The distinction between
maintenance and upgrading/improvement is calcu-
lated in relation to the condition of the asset when it
was acquired. Leased fixed assets are recognised in
the balance sheet as tangible fixed assets if the lease
is regarded as financial.
Subsidiaries
Subsidiaries are recognised in the company accounts
using the cost method. The investment is written
down to its fair value when the fair value is lower than
the cost price and this fall in value is not expected to
be temporary.
Accounts receivables
Accounts receivable from customers and other re-
ceivables are recorded at their nominal value after de-
ducting a provision for bad debts. The latter is based
on an individual assessment of each receivable. An
unspecified provision is made for minor receivables to
cover estimated bad debts.
Short-term placements
Short-term placements (shares regarded as current
assets) are recognised at the lower of their average
cost price and their fair value on the balance sheet
date. Dividends received and other payments are rec-
ognised as other financial income.
Foreign currencies
Holdings in foreign currencies are translated at the
rates prevailing at the balance sheet date.
Pensions
Pension costs and obligations are calculated on a linear
earning of pension rights, based on assumptions con-
cerning the discount rate, future pay adjustments, state
pensions and other social security benefits, the expected
return on pension fund assets, and actuarial assump-
tions on mortality, voluntary retirement and so forth.
Pension funds are recognised in the balance sheet at
their fair value less net pension commitments. Changes
in pension commitments relating to changes in pension
plans are allocated over the average remaining period of
service. The same applies to variances in underlying pen-
sion assumptions to the extent that these exceed 10 per
cent of the larger of pension commitments and pension
fund assets (corridor).
Notes to the financial statements
Kitron ASA