Unilever 2005 Annual Report Download - page 176

Accounting information and policies
Basis of preparation
The accounts have been prepared in accordance with applicable United
Kingdom accounting standards and the United Kingdom Companies Act
1985.
The accounts are prepared under the historical cost convention as
modified by the revaluation of financial assets classified as 'available-for-
sale investments', 'financial assets at fair value through profit or loss', and
'derivative financial instruments' in accordance with the accounting
policies set out below which have been consistently applied except as
described below.
Accounting policies
The principal accounting policies are as follows:
Intangible assets
Intangible assets comprise trademarks purchased after 1 January 1998
and are amortised in the profit and loss account over their expected
useful lives of up to maximum of 20 years. They are subject to review for
impairment in accordance with United Kingdom Financial Reporting
Standard 11 'Impairment of Fixed Assets and Goodwill' (FRS 11). Any
impairment is charged to the profit and loss account as it arises.
Fixed investments
Shares in group companies are stated at cost less any amounts written
off to reflect a permanent impairment. Any impairment is charged to the
profit and loss account as it arises.
Deferred taxation
Full provision is made for deferred taxation on all significant timing
differences arising from the recognition of items for taxation purposes in
different periods from those in which they are included in the company's
accounts. Full provision is made at the rates of tax prevailing at the year
end unless future rates have been enacted or substantively enacted.
Deferred tax assets and liabilities have not been discounted.
Shares held by employee share trusts
Shares held to satisfy options are accounted for in accordance with
United Kingdom law and UITF 37 and UITF 38. All differences between
the purchase price of the shares held to satisfy options granted and the
proceeds received for the shares, whether on exercise or lapse, are
charged to reserves.
Prior year adjustment
Financial Reporting Standard 21 (FRS 21) 'Events after the Balance Sheet
Date' has been adopted for the first time in the year ended 31 December
2005. Under FRS 21, proposed dividends do not meet the definition of a
liability until such time as they have been approved by shareholders at
the Annual General Meeting. Therefore, we no longer recognise a liability
in any period for dividends that have been proposed but will not be
approved until after the balance sheet date. This applies for external
dividends as well as intra-group dividends paid to the parent company.
The effect for the company of implementing FRS 21 has been to increase
retained profits by £385 million in the current period (2004: decrease of
£103 million), decrease dividends creditors due within one year by
£385 million (2004: decrease by £367 million), and increase inter-group
creditors due within one year by £nil (2004: increase of £470 million).
The comparative amounts for the year ended 31 December 2004 have
been restated accordingly.
Notes to the company accounts
Unilever PLC
176 Unilever Annual Report and Accounts 2005