Nokia 2012 Annual Report Download - page 221

Intellectual property rights (IPR) provisions
The Group provides for the estimated future settlements related to asserted and unasserted past
alleged IPR infringements based on the probable outcome of potential infringement.
Tax provisions
A provision for tax contingencies is recognized when, despite our belief that tax return positions are
supportable, it is more likely than not that certain positions will be challenged and may not be fully
sustained upon review by tax authorities. Tax provisions are based upon the estimated future
settlement amount at each balance sheet date.
Restructuring provisions
The Group provides for the estimated cost to restructure when a detailed formal plan of restructuring
has been completed, the restructuring plan has been announced by the Group and a reliable estimate
of the amount can be made.
Other provisions
The Group recognizes the estimated liability for non-cancellable purchase commitments for inventory
in excess of forecasted requirements at each balance sheet date.
The Group provides for onerous contracts based on the lower of the expected cost of fulfilling the
contract and the expected cost of terminating the contract.
Share-based compensation
The Group offers three types of global equity settled share-based compensation schemes for
employees: stock options, performance shares and restricted shares.
Employee services received, and the corresponding increase in equity, are measured by reference to
the fair value of the equity instruments as of the date of grant, excluding the impact of any non-market
vesting conditions. Non-market vesting conditions attached to the performance shares are included in
assumptions about the number of shares that the employee will ultimately receive. On a regular basis,
the Group reviews the assumptions made and where necessary, revises its estimates of the number of
performance shares that are expected to be settled. Share-based compensation is recognized as an
expense in the income statement over the relevant service periods.
A separate vesting period is defined for each quarterly stock options plan tranche. When stock options
are exercised, the proceeds received, net of any transaction costs, are credited to share issue
premium and the reserve for invested non-restricted equity.
The Group has also issued certain stock options which are accounted for as cash-settled. Related
employee services received, and the liability incurred, are measured at the fair value of the liability. The
fair value of stock options is estimated based on the reporting date market value less the exercise price
of the stock options. The fair value of the liability is remeasured at each reporting date and at the date
of settlement and related change in fair value is recognized in the income statement over the relevant
service periods.
Treasury shares
The Group recognizes acquired treasury shares as a deduction from equity at their acquisition cost.
When cancelled, the acquisition cost of treasury shares is recognized in retained earnings.
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