SOL MELIA ANNUAL REPORT 00 COMP

5 Accounting Principles
The most significant accounting principles applied in the preparation of the 2000 consolidated annual accounts are as follows:
5.1 Goodwill and negative differences on consolidation
The valuation differences between the investment and the equity, whenever these could not be attributed to specific assets
or liabilities at purchase time are reflected, when first consolidated, under two possible headings:
• Goodwill on consolidation
The differences between the acquisition price of subsidiaries or associated companies (Note 2) and their net book value,
whenever these are not attributable as a higher value of specific fixed assets of the acquired companies, are recorded as
goodwill, which is amortised on a straight-line basis over a 10 year period for those existing at December 31, 1998 and
over 20 years for the differences arising after that date. The reason for amortising over more than 10 years is due to
the fact that this is considered as the period during which the investment will contribute to generate profits for the
Group (See Note 6).
The surplus assigned to specific assets is amortized, when applicable, based on the actual depreciation.
• Negative consolidation differences
The negative consolidation difference is calculated by taking into account the difference between the book value of
the participation, direct or indirect, of the parent company in the subsidiary’s share capital and the value of the proportional
part of the subsidiary’s equity attributable to such participation on the first consolidation date (See Note
7). Negative consolidation differences are recorded under liabilities in the consolidated balance sheet.
5.2 Minority shareholders and results
• Minority shareholders:
This heading in the balance sheet liabilities includes the proportional part of the shareholders’ equity on the first consolidation
date that corresponds to third parties not belonging to the Group (See Note 19).
• Results attributed to minority shareholders
This is the participation in the consolidated profit or losses for the year that corresponds to minority shareholders (See
Note 19).
5.3 Transactions between consolidated companies
Results arising from internal operations within the consolidated group are eliminated, whenever the amount is significant,
and deferred until they are realised with third parties outside the Group.
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M ELIÁ
A NNUAL R EPORT 2000
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