Nokia 2009 Annual Report Download - page 229

18. Prepaid expenses and accrued income (Continued)
the use in Nokia mobile devices and Nokia Siemens Networks infrastructure equipment. The financial
structure of the agreement included an upfront payment of EUR 1.7 billion, which is amortized over
the contract period and ongoing royalties payable to Qualcomm. As part of the licence agreement,
Nokia also assigned ownership of a number of patents to Qualcomm. These patents were valued
using the income approach based on projected cash flows, on a discounted basis, over the assigned
patents’ estimated useful life. Based on the valuation and underlying assumptions Nokia determined
that the fair value of these patents were not material.
In addition, prepaid expenses and accrued income primarily consists of VAT and other tax receivables.
Prepaid expenses and accrued income also include prepaid pension costs, accrued interest income
and other accrued income, but no amounts which are individually significant.
19. Valuation and qualifying accounts
Allowances on assets to which they apply:
Balance at
beginning
of year
Charged to
cost and
expenses Deductions
(1)
Acquisitions
Balance
at end
of year
EURm EURm EURm EURm EURm
2009
Allowance for doubtful accounts ....... 415 155 (179) — 391
Excess and obsolete inventory ........ 348 192 (179) — 361
2008
Allowance for doubtful accounts ....... 332 224 (141) — 415
Excess and obsolete inventory ........ 417 151 (221) 1 348
2007
Allowance for doubtful accounts ....... 212 38 (72) 154 332
Excess and obsolete inventory ........ 218 145 (202) 256 417
(1)
Deductions include utilization and releases of the allowances.
F55
Notes to the Consolidated Financial Statements (Continued)