Nokia Corporation (2011) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Accounting principles [extract] Provisions [extract] Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. When the Group expects a provision […]

Accounting for donations to non-profit organisations An entity decides to enter into an arrangement to ‘donate’ €1m in cash to a university. A number of different options are available for the arrangement and the entity’s management want to determine whether the terms of these options make any difference to the timing, measurement or presentation of the €1m expenditure, as follows: Option 1: The entity enters […]

Revenue recognition for licensors in the record and music industry For each recording master delivered by a pop group, THRAG, the group (which operates through a service company) receives a payment of €1,000,000. This amount comprises: a non-returnable, non-recoupable payment of €100,000; a non-returnable but recoupable advance of €600,000; and a returnable, recoupable advance of €300,000. The recoupable advances of €900,000 can be recouped against […]

Deutsche Bank AG (2010) Notes to the Consolidated Financial Statements [extract] 01 – Significant Accounting Policies [extract] Commission and Fee Income [extract] The recognition of fee revenue (including commissions) is determined by the purpose of the fees and the basis of accounting for any associated financial instruments. If there is an associated financial instrument, fees that are an integral part of the effective interest rate […]

HSBC Holdings plc (2011) Notes on the Financial Statements [extract] 2 Summary of significant accounting policies [extract] (b) Non-interest income [extract] Fee income is earned from a diverse range of services provided by HSBC to its customers. Fee income is accounted for as follows: – income earned on the execution of a significant act is recognised as revenue when the act is completed (for example, […]

Syngenta AG (2011) 2. Accounting policies [extract] provisions A provision is recognized in the balance sheet when Syngenta has a legal or constructive obligation to a third party or parties as a result of a past event the amount of which can be reliably estimated and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount recognized […]

SAP AG (2007) Notes to the Consolidated Financial Statements 2007 [extract] 3. Summary of significant accounting policies [extract] Revenue Recognition [extract] Revenue for arrangements that involve significant production, modification, or customization of the software and those in which the services are not available from third-party vendors and are therefore deemed essential to the software, is recognized on a time-and-material basis or using the percentage of […]

The effect of timing of the creation of a constructive obligation on the recognition of a restructuring provision Scenario 1: Closure of a division – no implementation before end of the reporting period On 12 December 2013, the board of Entity A decided to close down a division. No announcement was made before the end of the reporting period (31 December 2013) and no other […]

France Télécom (2010) CONSOLIDATED FINANCIAL STATEMENTS [extract] NOTE 2 Accounting policies [extract] 2.8 Revenues [extract] Separable components of bundled offers Numerous service offers on the Group” main markets include two components: an equipment component (e.g. a mobile handset) and a service component (e.g. a talk plan). For the sale of multiple products or services, the Group evaluates all deliverables in the arrangement to determine whether […]

Distinguishing restructuring costs from ongoing expenses On 15 November 2013, management announced its intention to close down its operation in the North of the country and relocate to a new site in the South, primarily to be closer to its key customers. Before the end of the reporting period (31 December 2013) the principal elements of the plan were agreed with employee representatives; a lease […]