Nokia 2009 Annual Report Download - page 231

20. Fair value and other reserves (Continued)
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 the fair value and other reserves.
The Group continuously reviews the underlying cash flows and the hedges allocated thereto, to
ensure that the amounts transferred to the fair value reserves during the year ended December 31,
2009, 2008 and 2007 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.
All of the net fair value gains or losses recorded in the fair value and other reserve at December 31,
2009 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 loss account when the
forecasted foreign currency cash flows occur, at various dates up to approximately 1 year from the
balance sheet date.
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Notes to the Consolidated Financial Statements (Continued)