Annual Report 2010/11 - Sonova

3. Basis of consolidated
financial statements
The consolidated financial statements of the Group are
based on the financial statements of the in dividual Group
Companies at March 31 prepared in accordance with
uniform accounting policies. The consolidated financial
statements have been prepared under the historical cost
convention except for the revaluation of certain financial
assets at market val ue, in accordance with International
Financial Reporting Standards (IFRS), including International
Accounting Standards and Interpretations issued by
the International Accounting Standards Board (IASB). The
consolidated financial statements were approved by the
Board of directors of Sonova Holding AG on May 10, 2011
and are subject to approval by the Annual General Shareholders’
Meeting on June 21, 2011.
The consolidated financial statements include Sonova
Holding AG as well as the domestic and foreign subsidiaries
over which Sonova Holding AG exercises control. A
list of the significant com panies which are consolidated is
given in Note 36.
The preparation of financial statements requires management
to make estimates and assumptions that affect the
amounts reported for assets and liabilities and contingent
assets and liabilities at the date of the financial statements
as well as revenue and expenses reported for the financial
year (refer also to Note 3.6, “Significant accounting judgements
and estimates”). Actual results could differ from these
estimates.
3.1 Principles of consolidation
INveSTMeNTS IN SuBSIdIARIeS
Investments in subsidiaries are fully consolidated. These
are entities over which Sonova Holding AG directly or
indirectly exercises control. Control is the power to govern
the financial and operating poli cies of an entity so as to
obtain benefits from its ac tivities. Control is presumed to
exist when the parent owns, directly or indirectly through
subsidiar ies, more than half of the voting power of an entity
unless, in exceptional circumstances, it can be clearly
demonstrated that such ownership does not constitute
control. For the consolidated entities, 100% of assets,
liabilities, income, and expenses are included. Non­controlling
interests in equity and net income or loss are
shown separately in the balance sheet and income statement.
Changes in the ownership interest of a subsidiary
that does not result in a loss of control will be accounted
CoNSoLIdATed FINANCIAL STATeMeNTS
for as an equity transaction. Neither goodwill nor any
gains or losses will result.
Group Companies acquired during the year are included in
the consolidation from the date on which control over the
company is transferred to the Group, and are excluded from
the consolidation as of the date the Group ceases to have
control over the company. Intercompany balances and transactions
(incl. unrealized profit on intercompany in ventories)
are eliminated in full.
INveSTMeNTS IN ASSoCIATeS
Investments in associates are accounted for using the
equity method of accounting. These are entities in which
Sonova has significant influence and which are neither
subsidiaries nor joint ventures of Sonova. Significant influence
is the power to par ticipate in the financial and operating
policy decisions of the acquired company but is not
control or joint control over those policies (usually 20–50%
of voting rights). under the equity method, the investment
in an associate is initially recognized at cost (including
goodwill on acqui sition) and the carrying amount is increased
or decreased to recognize Sonova’s share of profit or loss
of the acquired company after the acquisition date. In order
to apply the equity method the most recent available financial
statements of an associate are used, however due to
practicability reasons the reporting dates might vary up to
three months from the Group’s reporting date. The net
assets and results from associates are adjusted, if necessary,
to comply with the Group’s accounting policies.
The Group’s share of equity in associated com panies, consolidated
using the equity method, is shown in the balance
sheet as “Investments in associates/joint ventures,” and
its share of the re sults of operations for the year is shown in
the income statement as “Share of gain/loss in asso ciates/
joint ventures.”
Associates acquired during the year are accounted for as
“Investments in associates/joint ventures” from the date on
which significant influence over the acquired company is
transferred to the Group, and derecognized from that position
as of the date the Group ceases to have significant
influence over an associate.
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