Nokia 2011 Annual Report Download - page 263

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 income statement. 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 years ended December 31, 2011 and
2010 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 reserves at December 31,
2011 on open forward foreign exchange contracts which hedge anticipated future foreign currency
sales or purchases are transferred from the hedging reserve to the income statement when the hedged
items affect the income statement, at various dates up to approximately 1 year from the balance sheet
date.
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