Reebok 2011 Annual Report Download - page 186

adidas Group
2011 Annual Report
CONSOLIDATED FINANCIAL STATEMENTS
04.8 Notes
182
2011
182
2011
04.8
02 Summary of significant accounting
policies
The consolidated financial statements are prepared in accordance
with the consolidation, accounting and valuation principles described
below.
Principles of consolidation
The consolidated financial statements include the financial state-
ments of adidas AG and its direct and indirect subsidiaries, which
are prepared in accordance with uniform accounting principles. A
company is considered a subsidiary if it is controlled by adidas AG, e.g.
by directly or indirectly governing the financial and operating policies
of the respective enterprise.
The number of consolidated subsidiaries evolved as follows for
the years ending December 31, 2011 and 2010, respectively:
Number of consolidated subsidiaries
2011 2010
January 1 169 177
First-time consolidated companies: 6 1
Thereof: newly founded 4 1
Thereof: purchased 2 –
Deconsolidated/divested companies – (1)
Intercompany mergers (2) (8)
December 31 173 169
A schedule of the shareholdings of adidas AG is shown in Attach-
ment II to the consolidated financial statements SEE SHAREHOLDINGS OF
ADIDAS AG, HERZOGENAURACH, P. 218
. Furthermore, the schedule of the share-
holdings of adidas AG will be published on the electronic platform of
the German Federal Gazette.
Within the scope of the first-time consolidation, all acquired
assets and liabilities are recognised in the statement of financial
position at fair value at the acquisition date. A debit difference between
the acquisition cost and the proportionate fair value of assets, liabil-
ities and contingent liabilities is shown as goodwill. A credit difference
is recorded in the income statement.
Acquisitions of additional investments in subsidiaries which are
already controlled are recorded as equity transactions. Therefore,
neither fair value adjustments of assets and liabilities nor gains or
losses are recognised. Any difference between the cost for such an
additional investment and the carrying amount of the net assets at the
acquisition date is directly recorded in shareholders’ equity.
The financial effects of intercompany transactions, as well as
any unrealised gains and losses arising from intercompany business
relations are eliminated in preparing the consolidated financial
statements.
Principles of measurement
The following table includes an overview of selected measure-
ment principles used in the preparation of the consolidated financial
statements.
Overview of selected measurement principles
Item Measurement principle
Assets
Cash and cash equivalents Nominal amount
Short-term financial assets At fair value through profit or loss
Accounts receivable Amortised cost
Inventories Lower of cost or net realisable value
Assets classified as held for sale Lower of carrying amount and fair value
less costs to sell
Property, plant and equipment Amortised cost
Goodwill Impairment-only approach
Intangible assets (except goodwill):
With definite useful life Amortised cost
With indefinite useful life Impairment-only approach
Other financial assets (categories
according to IAS 39):
At fair value through profit or loss At fair value through profit or loss
Held to maturity Amortised cost
Loans and receivables Amortised cost
Available-for-sale At fair value in other comprehensive
income
Liabilities
Borrowings Amortised cost
Accounts payable Amortised cost
Other financial liabilities Amortised cost
Provisions:
Pensions Projected unit credit method
Other provisions Settlement amount
Accrued liabilities Amortised cost
Currency translation
Transactions in foreign currencies are initially recorded in the respec-
tive functional currency by applying the spot exchange rate valid at the
transaction date to the foreign currency amount.
In the individual financial statements of Group companies,
monetary items denominated in non-functional currencies of the
subsidiaries are generally translated into the functional currency
at closing exchange rates at the balance sheet date. The resulting
currency gains and losses are recorded directly in the income
statement.