Nokia 2007 Annual Report Download - page 152

Notes to the Consolidated Financial Statements
1. Accounting principles
Basis of presentation
The consolidated financial statements of Nokia Corporation (“Nokia” or “the Group”), a Finnish public
limited liability company with domicile in Helsinki, in the Republic of Finland, are prepared in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IASB”) and in conformity with IFRS as adopted by the European Union (“IFRS”). The
consolidated financial statements are presented in millions of euros (“EURm”), except as noted, and
are prepared under the historical cost convention, except as disclosed in the accounting policies
below. The notes to the consolidated financial statements also conform with Finnish Accounting
legislation. On March 19, 2008, Nokia’s Board of Directors authorized the financial statements for
issuance and filing.
As described in Note 8 the Group and Siemens AG (“Siemens”) completed a transaction to form Nokia
Siemens Networks on April 1, 2007. Nokia and Siemens contributed to Nokia Siemens Networks
certain tangible and intangible assets and certain business interests that comprised Nokia’s networks
business and Siemens’ carrierrelated operations. This transaction had a material impact on the
consolidated financial statements and associated notes.
Adoption of pronouncements under IFRS
In the current year, the Group has adopted all of the new and revised standards, amendments and
interpretations to existing standards issued by the IASB that are relevant to its operations and
effective for accounting periods commencing on or after from January 1, 2007.
• IFRS 7 Financial Instruments: Disclosures. The impact of the new standard has been to expand
the disclosures provided in the financial statements regarding the Group’s financial instru
ments. The Group’s financial instruments include availableforsale investments, derivatives,
loans receivable and payable and accounts receivable and payable.
• IFRIC 8, Scope of IFRS 2 requires consideration of transactions involving the issuance of equity
instruments where the identifiable consideration received is less than the fair value of the
equity instruments issued to establish whether or not they fall within the scope of IFRS 2.
• IFRIC 9, Reassessment of Embedded Derivatives requires an entity to assess whether an
embedded derivative is required to be separated from the host contract and accounted for as a
derivative when the entity first becomes a party to the contract.
• IAS 1 (Amendment), Presentation of Financial Statements: Capital Disclosures requires qualita
tive and quantitative disclosures to enable users to evaluate an entity’s objectives, policies and
processes for managing capital.
The adoption of each of the above mentioned standards did not have a material impact to the
Group’s balance sheet, profit and loss or cash flows.
Principles of consolidation
The consolidated financial statements include the accounts of Nokia’s parent company (“Parent
Company”), and each of those companies over which the Group exercises control. Control over an
entity is presumed to exist when the Group owns, directly or indirectly through subsidiaries, over
50% of the voting rights of the entity, the Group has the power to govern the operating and financial
policies of the entity through agreement or the Group has the power to appoint or remove the
majority of the members of the board of the entity. The Group’s share of profits and losses of
associated companies is included in the consolidated profit and loss account in accordance with the
equity method of accounting. An associated company is an entity over which the Group exercises
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