Nokia 2005 Annual Report Download - page 212

Notes to the Consolidated Financial Statements (Continued)
39. Differences between International Financial Reporting Standards and US Generally
Accepted Accounting Principles (Continued)
The Group recorded no goodwill impairments during 2005 and 2004.
Below is a roll forward of US GAAP goodwill during 2005 and 2004:
Common
Mobile Enterprise Group
Phones Multimedia Solutions Networks Functions Group
EURm EURm EURm EURm EURm EURm
Balance as of January 1, 2004 ....... 129 22 40 271 9 471
Translation adjustment ............ (1) — (3) (22) — (26)
Balance as of December 31, 2004 ..... 128 22 37 249 9 445
Goodwill disposed ................ — — — — (9) (9)
Translation adjustment ............ 45 — 4 28 — 77
Balance as of December 31, 2005 ..... 173 22 41 277 — 513
Loss on disposal
In 2005, the Group divested the remaining holdings in a Group company resulting in a loss on
disposal. Under IFRS, the goodwill related to the original acquisition had been fully amortized.
Under US GAAP, the goodwill related to the acquisition of the Group company was written off
upon disposal resulting in an additional loss.
The US GAAP loss on disposal adjustment reflects the write-off of goodwill under US GAAP that
was fully amortized under IFRS.
Translation of goodwill
Under IFRS, the Group has historically translated goodwill arising on the acquisition of foreign
subsidiaries at historical foreign exchange rates. Subsequent to the adoption of IAS 21 (revised
2004) as of January 1, 2005, the Group translates goodwill arising on prospective acquisitions of
foreign companies at balance sheet date closing rates.
Under US GAAP, goodwill is translated at the closing rate on the balance sheet date with gains and
losses recorded as a component of other comprehensive income.
The US GAAP translation of goodwill adjustment reflects cumulative translation differences
between historical and current exchange rates on goodwill arising from acquisitions of foreign
subsidiaries.
Disclosures required by US GAAP
Dependence on limited sources of supply
Nokia’s manufacturing operations depend to a certain extent on obtaining adequate supplies of
fully functional components on a timely basis. The Group’s principal supply requirements are for
electronic components, mechanical components and software, which all have a wide range of
applications in our products. Electronic components include integrated circuits, microprocessors,
standard components, memory devices, cameras, displays, batteries and chargers while
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