Nokia 2004 Annual Report Download - page 159
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Notes to the Consolidated Financial Statements (Continued)
21. Fair value and other reserves
Hedging Available-for-sale
reserve, EURm investments, EURm Total, EURm
Gross Tax Net Gross Tax Net Gross Tax Net
Balance at December 31, 2002 .......... 31 (9) 22 (13) (16) (29) 18 (25) (7)
Cash flow hedges:
Fair value gains/(losses) in period ...... 1 1 2 — — — 1 1 2
Available-for-sale Investments:
Net fair value gains/(losses) ........... — — — 110 (12) 98 110 (12) 98
Transfer to profit and loss account on
impairment ...................... — — — 27 — 27 27 — 27
Transfer of fair value gains to profit and
loss account on disposal ............. — — — (84) 20 (64) (84) 20 (64)
Transfer of fair value losses to profit and
loss account on disposal ............. — — — 43 (6) 37 43 (6) 37
Balance at December 31, 2003 .......... 32 (8) 24 83 (14) 69 115 (22) 93
Cash flow hedges:
Fair value gains/(losses) in period ...... 59 (16) 43 — — — 59 (16) 43
Available-for-sale Investments:
Net fair value gains/(losses) ........... — — — 18 (1) 17 18 (1) 17
Transfer to profit and loss account on
impairment ...................... — — — 11 — 11 11 — 11
Transfer of fair value gains to profit and
loss account on disposal ............. — — — (105) 10 (95) (105) 10 (95)
Transfer of fair value losses to profit and
loss account on disposal ............. — — — — — — — — —
Balance at December 31, 2004 .......... 91 (24) 67 7 (5) 2 98 (29) 69
In order to ensure that amounts deferred in the cash flow hedging reserve represent only the
effective portion of gains and losses on properly designated hedges of future transactions that
remain highly probable at the balance sheet date, Nokia has adopted a process under which all
derivative gains and losses are initially recognized in the profit and loss account. The appropriate
reserve balance is calculated at the end of each period and posted to equity.
Nokia continuously reviews the underlying cash flows and the hedges allocated thereto, to ensure
that the amounts transferred to the Hedging Reserve during the year ended December 31, 2004
and 2003 do not include gains/losses on forward exchange contracts that have been designated to
hedge forecasted sales or purchases that are no longer expected to occur. Because of the number
of transactions undertaken during each period and the process used to calculate the reserve
balance, separate disclosure of the transfers of gains and losses to and from the reserve would be
impractical.
All of the net fair value gains or losses recorded in the Fair value and other reserve at
December 31, 2004 on open forward foreign exchange contracts which hedge anticipated future
foreign currency sales or purchases are transferred from the Hedging Reserve to the profit and
F-34