Matth. Hohner AG

Notes to the Consolidated Financial Statements for Business Year 2010/2011
Foreign currency translation
The functional currency concept is applied to translate the financial statements in foreign currency by the
subsidiaries included in the consolidated Group. The functional currency is the local currency for all entities,
since all foreign entities operate independently. Foreign currency transactions are initially translated at the
spot rate applicable between the functional currency and the foreign currency on the date of the transaction.
As of the balance sheet date, the assets and liabilities of the foreign subsidiaries are translated into the
presentation currency of Matth. Hohner Aktiengesellschaft (Euro) using the closing rate. Income and expenses
are translated at the weighted average exchange rate in the business year. The resulting translation differences
are recognized separately in equity.
The following exchange rates were decisive for currency translation in the Group:
March
31, 2011
Closing rate Average rate
March
31, 2010
2010/2011 2009/2010
USD 1.4207 1.3479 1.3225 1.4137
CHF 1.3005 1.4276 1.3381 1.5015
CNY 8.8220 9.8350 8.9712 9.5174
Intangible assets
By initial recognition, intangible assets which were separately bought are measured at acquisition or
manufacturing cost. The subsequent measurement of intangible assets is depend on the estimations if a
limited or unlimited economic life time is existing. After initial recognition, intangible assets are carried at
cost less any accumulated amortization and any accumulated impairment losses. The period and the method
of amortization will be examined for an intangible asset with a limited economic lifetime at least by the
end of each business year. If the expected economic lifetime of the intangible asset or the expected asset’s
amortization of the intangible asset has been changed, another amortization period or another amortization
method will be chosen. Such changes will be handling like changes of estimation. The ordinary useful life of
the intangible assets that can only be used for a limited period of time is between 3 and 20 years.
Goodwill is subject to an impairment test, if there is evidence that the intangible assets could be impaired.
Goodwill and assets with unlimited lifetime are not ordinary amortized; however an impairment test is
conducted one time of a year.
Profits and losses of the asset sales are recorded to other operating income or other operating expenses.
Research and development costs
Research expenses are recognized as an expense in the period in which they are incurred. An intangible asset
resulting from development during the course of an individual project is only recognized if the Group can
provide evidence of the technical feasibility of completing the intangible asset so that it will be available for
internal use or sale, and the intention to complete the intangible asset and to use or sell it.
In addition, the Group must substantiate the creation of a future economic benefit by the asset, the
availability of resources to complete the asset and the ability to determine reliably the expenses allocable to
the intangible asset during its development. As these criteria are not satisfied, the development costs are
recognized in the period in which they are incurred.
Notes to the CoNsolidated FiNaNCial statemeNts Notes to the CoNsolidated FiNaNCial statemeNts
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