SOL MELIA ANNUAL REPORT 00 COMP

ACCOUNTING PRINCIPLES
5.9 Investments
The investments in associated companies have been recorded according to the equity method based on the net book value
which is adjusted, when applicable, by the specific valuation made of their assets and liabilities (See Note 8). Results for
the year obtained by these companies are reflected in the consolidated profit and loss accounts as “Participation in profit
(losses) of companies consolidated by the equity method” (See Note 25).
Unquoted securities are valued at cost of acquisition less the corresponding amortisation when applicable.
Securities, both of fixed and variable interest, included under the Investments and Short-term investments headings are
valued at their acquisition price upon subscription or purchase and include the expenses inherent to each operation.
Non-trade credits are recorded for the amount paid and corrected at year-end, whenever applicable, by the corresponding
provision to cover risks involved due to possible insolvencies. At year-end, provisions are applied to the appropriate concept.
5.10 Deferred expenses
Expenses for fomalisation of debts are valued at cost.
Expenses for deferred interest relate to the difference between the repayment value and the nominal value of the relevant debts.
These expenses are written down over the period of maturity of the corresponding debts and according to a financing plan.
5.11 Non-trade loans
Both short and long-term non-trade loans are shown at repayment value on the assets side of the consolidated balance sheet.
5.12 Inventories (Trade inventories, raw materials and other supplies)
Raw and ancillary materials are valued at their average acquisition cost which is, generally, lower than the realisable value.
The acquisition price includes the amount invoiced plus all additional expenses incurred until the goods are stored in the
warehouse. In the case of real estate inventories, the accounting values include tacit capital gains recorded for consolidation
purposes only (See Note 14).
5.13 Clients
Clients’ balances are reflected in the balance sheet at real value and corrected, whenever applicable, by the corresponding
provision to cover risks involved due to possible insolvencies. Such provisions are applied when the debt is considered as
irrecoverable.
The Group has ceded accounts receivable (factoring) for a total mount of Ptas.5,705 million to the company Compas Sigma.
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