LensCrafters 2010 Annual Report Download - page 135

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NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
judgment from management based on available documentation and information, as well as the solvency of the
customer, and based on past experience and historical trends;
valuation of inventories. Inventories which are obsolete and slow moving are periodically evaluated and written down b)
in the case that their recoverable amount is lower than their carrying amount. Write–downs are calculated on the basis
of management assumptions and estimates which are derived from experience and historical results;
valuation of deferred tax assets. The valuation of deferred tax assets is based on forecasted results which depend c)
upon factors that could vary over time and could have significant effects on the valuation of deferred tax assets;
Income taxes. The Group is subject to different tax jurisdictions. The determination of tax liabilities for the Group d)
requires the use of assumptions with respect to transactions whose fiscal consequences are not yet certain at the
end of the reporting period. The Group recognizes liabilities which could result from future inspections by the fiscal
authorities on the basis of an estimate of the amounts expected to be paid to the taxation authorities. If the result of
the abovementioned inspections differs from that estimated by Group management, there could be significant effects
on both current and deferred taxes;
valuation of goodwill. Goodwill is subject to an annual impairment test. This calculation requires management’s e)
judgment based on information available within the Group and the market, as well as on past experience;
benefit plans. The Group participates in benefit plans in various countries. The present value of pension liabilities f)
is determined using actuarial techniques and certain assumptions. These assumptions include the discount rate,
the expected return on plan assets, the rates of future compensation increases and rates relative to mortality and
resignations. Any change in the abovementioned assumptions could result in significant effects on the employee
benefit liabilities.
Earnings per share
The Company determines earnings per share and earnings per diluted share in accordance with IAS 33 – Earnings per
Share. Basic earnings per share are calculated by dividing profit or loss attributable to ordinary equity holders of the
parent entity by the weighted average number of shares outstanding during the period. For the purpose of calculating
the diluted earnings per share, the Company adjusts the profit and loss attributable to ordinary equity holders, and the
weighted average number of shares outstanding, for the effect of all dilutive potential ordinary shares.
Treasury Shares
Treasury shares are recorded as a reduction of Stockholders’ equity. The original cost of treasury shares, as well as gains or
losses on the purchase, sale or cancellation of treasury shares, are not recorded in the consolidated statement of income.
2. NEW ACCOUNTING PRINCIPLES
Certain new principles, amendments and interpretations are effective for reporting periods beginning on or after January
1, 2010.
Amendments and interpretations of existing principles which are effective for reporting periods beginning on
January 1, 2010
IFRS 3 (revised) – Business combinations: The new standard continues to apply the purchase accounting method to
business combinations, introducing certain significant changes. For example, acquisition–related costs (i.e. attorneys,
advisors, auditors and professionals in general) are accounted for as expenses in the period in which they are incurred
and services are received. There is a choice on an acquisition by acquisition basis to measure any non controlling interest
in the acquiree either at fair value (full goodwill) or at the non–controlling interest’s proportionate share of the acquiree’s
identifiable net assets. In the case that the acquirer obtains control of an acquiree in which it held an equity interest
immediately before the acquisition date (step acquisitions), the acquirer remeasures its previously held equity interest in
the acquiree at its acquisition date fair value and recognizes the resulting gain or loss in the consolidated statement of