Nokia 2006 Annual Report Download - page 184

Notes to the Consolidated Financial Statements (Continued)
26. Deferred taxes
2006 2005
EURm EURm
Deferred tax assets:
Intercompany profit in inventory ********************************************** 34 49
Tax losses carried forward **************************************************** 41 7
Warranty provision(1) ********************************************************* 134 151
Other provisions(1) *********************************************************** 253 280
Fair value gain/losses ******************************************************** —43
Depreciation differences and untaxed reserves ********************************** 104 88
Other temporary differences(2) ************************************************* 243 228
Total deferred tax assets ******************************************************* 809 846
Deferred tax liabilities:
Depreciation differences and untaxed reserves ********************************** (23) (24)
Fair value gains/losses ******************************************************* (16) —
Undistributed earnings ******************************************************* (65) (68)
Other temporary differences ************************************************** (101) (59)
Total deferred tax liabilities***************************************************** (205) (151)
Net deferred tax asset ********************************************************* 604 695
The tax charged to shareholders’ equity is as follows:
Fair value and other reserves, fair value gains/losses and excess tax benefit on
sharebased compensation *************************************************** (43) 93
(1) Deferred tax assets have been increased in all periods presented by EUR 154 million for
recognition of certain additional items relating to periods prior to 2002. See Note 1.
(2) In 2006, other temporary differences include deferred tax of EUR 70 million arising from share
based compensation.
At December 31, 2006, the Group had loss carryforwards, primarily attributable to foreign
subsidiaries of EUR 143 million (EUR 92 million in 2005 and EUR 105 million in 2004), most of which
will expire between 2007 and 2025.
At December 31, 2006 the Group had loss carry forwards of EUR 24 million (EUR 71 million in 2005)
for which no deferred tax asset was recognized due to uncertainty of utilization of these loss carry
forwards. These loss carry forwards will expire in years 2007 through 2012.
27. Shortterm borrowings
Shortterm borrowings consist primarily of borrowings from banks denominated in different foreign
currencies. The weighted average interest rate at December 31, 2006 was 8.20% (4.68% at
December 31, 2005).
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