TomTom 2005 Annual Report Download - page 67
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Provisions
ProvisionsarerecognisedwhentheGrouphasapresent
obligationasaresultofapastevent,anditisprobable
thattheGroupwillberequiredtosettlethatobligation.
Provisionsaremeasuredatmanagement’sbestestimate
oftheexpenditurerequiredtosettletheobligationatthe
balancesheetdate,andarediscountedtopresentvalue
wheretheeffectismaterial.
TheCompanyprovidesforwarrantyclaimsbasedon
historicalandestimatedreturnratesperproductlineand
estimatedaveragerepaircosts.Warrantycostsare
recordedwithincostofsales.
Otherprovisionsarerecordedforprobableliabilitiesthat
canbereasonablyestimated.Theotherprovisions
includelegalclaimsandtaxrisksforwhichitismore
likelythannotthatanoutflowofresourceswillbe
requiredtosettletheobligation.
Payables
Allpayablesarevaluedatnominalvalue.
Principlesforpreparationofthe
consolidatedcashflowstatement
Thecashflowstatementispreparedusingtheindirect
method.
Thefundsinthecashflowstatementconsistofcashand
cashequivalents.Cashequivalentscanbeconsideredas
highlyliquidinvestments.
Cashflowsinforeigncurrenciesaretranslatedatthe
averagemonthlyexchangerate.Exchangerate
differencesarisingfromtheuseoffinancinginstruments
areshownseparatelyinthecashflowstatement.
Corporateincometaxes(includingrelatedinterest),
interestreceivedanddividendsreceivedarestatedunder
thecashflowfromoperatingactivities.Interestpaidand
dividendspaidarestatedunderthecashflowfrom
financingactivities.