Reebok 2008 Annual Report Download - page 193

adidas Group Annual Report 2008 189
28 Income taxes
adidas AG and its German subsidiaries are subject to German corporate and trade taxes. For the
year ending December 31, 2008, the statutory corporate income tax rate of 15% plus a surcharge
of 5.5% thereon is applied to earnings. The municipal trade tax is approximately 11.6% of taxable
income.
For non-German companies, deferred taxes are calculated based on tax rates that have been
enacted or substantively enacted by the closing date.
Deferred tax assets and liabilities
Deferred tax assets and liabilities are offset if they relate to the same fi scal authority. The follow-
ing deferred tax assets and liabilities, determined after appropriate offsetting, are presented on
the balance sheet:
Deferred tax assets /liabilities
€ in millions
Dec. 31, 2008 Dec. 31, 2007
Deferred tax assets 344 315
Deferred tax liabilities (463) (450)
Deferred tax assets, net (119) (135)
The movements of deferred taxes are as follows:
Movement of deferred taxes
€ in millions
2008 2007
Deferred tax assets, net as at January 1 (135) (190)
Deferred tax income 71 26
Change in consolidated companies see Note 4 1) (9) —
Change in deferred taxes on assets classifi ed as held-for-sale see Note 3 2) 3 —
Change in deferred taxes attributable to effective portion of qualifying hedging
instruments recorded in equity see Note 23 (41) 11
Currency translation differences (5) 25
Change in deferred taxes attributable to actuarial gains and losses recorded
in equity see Note 18 (3) (7)
Deferred tax assets, net as at December 31 (119) (135)
1) Relates to the acquisition of Ashworth, Inc. and Textronics, Inc. for the year ending December 31, 2008.
2) Relates to the disposal group Gekko Brands, LLC which is classifi ed as held-for-sale for the year ending December 31, 2008.
Gross Group deferred tax assets and liabilities before valuation allowances and appropriate off-
settings are attributable to the items detailed in the table below:
Deferred taxes
€ in millions
Dec. 31, 2008 Dec. 31, 2007
Non-current assets 88 75
Current assets 100 112
Accrued liabilities and provisions 140 143
Accumulated tax loss carry-forwards 91 8
Deferred tax assets 419 338
Non-current assets 444 420
Current assets 45 47
Accrued liabilities and provisions 49 6
Deferred tax liabilities 538 473
Deferred tax assets, net (119) (135)
The acquisitions of Ashworth, Inc. and Textronics, Inc. were accounted for under the “purchase
method” see Note 4. Deferred tax liabilities were recorded representing the difference between
the fair value and the tax basis of acquired assets.