Reebok 2015 Annual Report Download - page 203

CONSOLIDATED FINANCIAL STATEMENTS
Notes
199
4
Interest
Interest is recognised as income or expense as incurred using the ‘effective interest method’ with the
exception of interest that is directly attributable to the acquisition, construction or production of a qualifying
asset. This interest is capitalised as part of the cost of the qualifying asset.
Government grants
The Group receives government grants related to income in the form of subsidies, subventions or premiums
from local, national or international government authorities such as those of the Federal Republic of
Germany, the European Union and the Free State of Bavaria.
Government grants related to income are recognised if there is reasonable assurance that the grants
will be received and that the Group will comply with the conditions attached.
Grants related to income are reported in the consolidated income statement as a deduction from the
related expenses.
Income taxes
Current income taxes are computed in accordance with the applicable taxation rules established in the
countries in which the Group operates.
The Group computes deferred taxes for all temporary differences between the carrying amount and the
tax base of its assets and liabilities and tax loss carry-forwards. As it is not permitted to recognise a deferred
tax liability for the initial recognition of goodwill, the Group does not compute any deferred taxes thereon.
Deferred tax assets arising from deductible temporary differences and tax loss carry-forwards which
exceed taxable temporary differences are only recognised to the extent that it is probable that the company
concerned will generate sufficient taxable income to realise the associated benefit.
Income tax is recognised in the income statement except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Estimation uncertainties and judgements
The preparation of financial statements in conformity with IFRS requires the use of assumptions and
estimates that affect reported amounts and related disclosures. Although such estimates are based on
Management’s best knowledge of current events and actions, actual results may ultimately differ from
these estimates.
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date which have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are outlined in the respective Notes, in particular goodwill SEE
NOTE 13 , trademarks SEE NOTE 14 , other provisions SEE NOTE 20 , pensions SEE NOTE 24 , derivatives
SEE NOTE 29, deferred taxes SEE NOTE 34 as well as litigation and other legal risks SEE NOTE 38.
Judgements have, for instance, been used in classifying leasing arrangements as well as in determining
valuation methods for intangible assets.