Reebok 2015 Annual Report Download - page 202

CONSOLIDATED FINANCIAL STATEMENTS
Notes
198
4
Treasury shares
When treasury shares recognised as equity are repurchased, the amount of the consideration paid, which
includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. The
nominal value of € 1 per treasury share is debited to share capital. Any premium or discount to the nominal
value is shown as an adjustment to the retained earnings. If treasury shares are sold or re-issued, the
nominal value of the shares will be credited to share capital.
Revenue
Revenue in terms of income derived from the sale of goods is recognised when the significant risks and
rewards of ownership of the goods are transferred to the buyer and when the adidas Group does not retain
any continuing managerial involvement with the goods. The timing of the transfer of significant risks and
rewards depends on the individual terms of the sales agreement (terms of delivery).
Revenue from the rendering of services is recognised when the respective services are rendered.
In addition, revenue from the sale of goods and from the rendering of services is only recognised when
the amount of revenue as well as associated costs can be measured reliably and when it is probable that
the economic benefits associated with the transaction will flow to the Group.
Revenue is measured at the fair value of the consideration received or receivable, net of returns, early
payment discounts and rebates.
Under certain conditions and in accordance with contractual agreements, customers of the adidas
Group have the right to return products and to either exchange them for similar or other products or to
return the products against the issuance of a credit note. Revenue related to estimated returns is accrued
based on past experience by means of a provision for returns, allowances and warranty SEE NOTE 20.
Provided that the customers meet certain pre-defined conditions, the adidas Group grants its customers
different types of globally aligned performance-based rebates. Examples are sales growth and loyalty as
well as sell-out support, e.g. through retail space management/franchise. When it is assumed that the
customer fulfils the requirements for being granted the rebate, this amount is accrued by means of an
accrued liability for marketing and sales SEE NOTE 21.
In addition, the adidas Group generates revenue from the licensing-out of the right to use the adidas,
Reebok and TaylorMade brands as well as various other trademarks to third parties. The related royalty
and commission income is recognised based on the contract terms on an accrual basis.
Advertising and promotional expenditures
Production costs for media campaigns are included in prepaid expenses (other current and non-current
assets) until the services are received, and upon receipt expensed in full. Significant media buying costs
are expensed over the intended duration of the broadcast.
Promotional expenses that involve payments, including one-time up-front payments for promotion
contracts, are expensed on a straight-line basis over the term of the agreement.