Adidas 2001 Annual Report Download - page 74

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69
Consolidated Accounts
The fair values of forward contracts and currency options are determined
on the basis of the market conditions on the reporting dates. The fair
values of interest rate options on the reporting date are assessed by the
financial institutions through which these options had been arranged.
Cash and Cash Equivalents
Cash and cash equivalents represent cash and short-term, highly liquid
investments with maturities of three months and less.
Receivables
Receivables are stated at nominal amounts less allowances for doubtful
accounts. These allowances are determined on the basis of individual risk
assessment and past experience of losses.
Inventories
Merchandise and finished goods are valued at the lower of cost or net
realizable value. Costs are determined using a standard valuation method
which approximates the first-in, first-out method or the average cost
method. Costs of finished goods include cost of raw materials, direct labor
and manufacturing overheads. The lower of cost or net realizable value
allowances are computed consistently throughout the Company based
on the age and expected future sales of the items on hand.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is computed on a declining balance or straight-
line basis on useful lives as follows:
Expenditures for maintenance and repairs are expensed as incurred.
Significant renewals and improvements are capitalized.
Investment Property Held for Sale
Investment property held for sale is measured initially at cost. For the
subsequent measurement the Company applies the cost model.
Impairment
In the event that facts and circumstances indicate that the costs of long-
lived assets are impaired, an evaluation of recoverability is performed.
An exceptional write-down is made if the carrying amount exceeds the
recoverable amount.
Finance Leases
If under a lease agreement substantially the rewards and all risks
associated with an asset are transferred to the Company, the asset less
accumulated depreciation and the corresponding liability are recognized
at the fair value of the asset or the lower net present value of the
minimum lease payments.
Years
Buildings 10-50
Leasehold improvements 5-20
Equipment, machinery and furniture and fittings 2-10