Nokia 2011 Annual Report Download - page 261

In addition to derivative liabilities the Group had a non-controlling interest that included a put
arrangement measured at its redemption value of EUR 88 million at December 31, 2010 presented in
Other financial liabilities. The put arrangement has been exercised in the first quarter of 2011.
18. Inventories
2011 2010
EURm EURm
Raw materials, supplies and other ............................................ 789 762
Work in progress .......................................................... 516 642
Finished goods ............................................................ 1 025 1 119
Total .................................................................... 2 330 2 523
19. Prepaid expenses and accrued income
2011 2010
EURm EURm
Social security, VAT and other taxes .......................................... 1 906 1 690
Deferred cost of sales ...................................................... 114 175
Other prepaid expenses and accrued income ................................... 2 468 2 495
Total .................................................................... 4 488 4 360
In 2011, other prepaid expenses and accrued income included advance payments to Qualcomm of
EUR 1 069 million (EUR 1 166 million in 2010). In 2008, Nokia and Qualcomm entered into a new 15
year agreement, under the terms of which Nokia was granted a license to all Qualcomm’s patents for
the use in Nokia mobile devices and Nokia Siemens Networks infrastructure equipment. The financial
structure of the agreement included an upfront payment of EUR 1.7 billion, which is amortized over the
contract period and ongoing 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.
Prepaid expenses and accrued income also include, accrued interest income and various other
prepaid expenses and accrued income, but no amounts which are individually significant.
20. Valuation and qualifying accounts
Allowances on assets to which they apply:
Balance at
beginning
of year
Charged to
cost and
expenses Deductions (1)
Balance
at end
of year
EURm EURm EURm EURm
2011
Allowance for doubtful accounts ...................... 363 131 (210) 284
Excess and obsolete inventory ....................... 301 345 (189) 457
2010
Allowance for doubtful accounts ...................... 391 117 (145) 363
Excess and obsolete inventory ....................... 361 124 (184) 301
2009
Allowance for doubtful accounts ...................... 415 155 (179) 391
Excess and obsolete inventory ....................... 348 192 (179) 361
(1) Deductions include utilization and releases of the allowances.
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