Annual Report 2010/11 - Sonova

PRovISIoNS
Provisions are recognized when the Group has a present
obligation (legal or constructive) as a result of a past event,
where it is probable that an outflow of resources will be
required to settle the obligation, and where a reliable estimate
can be made of the amount of the obligation. If the
effect of the time value of money is material, provisions are
de ter mined by discounting the expected future cash flows.
The Group recognizes provisions for warranty costs to
cover any costs arising from the warranty given on its products
sold (including costs for legal proceedings and related
costs). The provision is calculated using historical and pro­
jected data on warranty rates, claim rates and amounts,
ser vice costs, remaining warranty period and num ber of
hearing aids and implants on which the warranty is still
active. Short­term portions of warranty provi sions are reclassified
to short­term provisions at each reporting date.
NoN-CuRReNT FINANCIAL LIABILITIeS
Non­current financial liabilities primarily consist of longterm
bank debts with a maturity of over twelve months.
Such financial liabilities are recognized initially at fair value,
including any directly attributable transaction costs. Subsequent
to initial recognition these financial liabilities are
measured at amortized cost using the effective interest
method.
SHARe CAPITAL
ordinary shares are classified as equity. dividends on ordinary
shares are recorded in equity in the period in which
they are approved by the parent companies’ shareholders.
In the case any of the Group Companies purchases shares
of the parent company, the consideration paid is recognized
as treasury shares and presented as a deduction from
equity unless these shares are cancelled or sold. Any consideration
received from the sale of these shares is recognized
in equity.
INCoMe TAxeS
CoNSoLIdATed FINANCIAL STATeMeNTS 101
Income taxes include current and deferred income taxes.
The Sonova Group is subject to income taxes in numerous
jurisdictions and significant judgement is required in determining
the worldwide provision for income taxes. The
multitude of transactions and calculations implies estimates
and assumptions. The Group recognizes liabilities based
on estimates of whether additional taxes will be due.
Where the final tax outcome is different from the amounts
that were initially recorded, such diff erences will impact
the income tax and deferred tax provisions in the period in
which such deter mination is made. deferred tax is recorded
on the valuation differences (temporary differences) between
the tax bases of assets and liabilities and their carrying
values in the consolidated balance sheet. deferred tax assets
are recognized to the extent that it is probable that future
taxable income will be available against which the temporary
differences and tax losses can be offset.
A provision for non­recoverable withholding taxes is made
only on anticipated dividend distributions from subsidiaries.
No provision is made in respect of possible future dividend
distributions from undistributed earnings, as the parent is
able to control the timing of the reversal of the tem porary
difference and such amounts are considered to be permanently
reinvested.
ReveNue ReCoGNITIoN
Sales are recognized net of sales taxes and discounts upon
delivery of products and reasonably assured collectibility
of the related receivables. Probable returns of products are
estimated and a correspond ing pro vision is recognized.
Intercompany sales are eliminated.
Sales of services (such as long­term service contracts) are
recognized in the accounting period in which the services
are rendered.
Interest income is recognized on a time proportion basis
using the effective interest method. dividend income
is recognized when the right to receive payment is established.