Sennheiser 2011 Annual Report Download - page 37

NOTES ON CONSOLIDATED FINANCIAL STATEMENTS 2011
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NOTES ON CONSOLIDATED FINANCIAL STATEMENTS 2011
73
C. PRINCIPLES OF CONSOLIDATION
The accounting and valuation principles used throughout the Group correspond to those applied in the annual
financial statements of the parent company and to the consolidating accounting standards laid down under
commercial law (Section 308, subsections 1 and 2 HGB).
For the individual annual financial statements included in this report, the common balance sheet date is
December 31, 2011.
The individual annual financial statements denominated in foreign currencies were translated in accordance
with Section 308a HGB. With the exception of equity, items were converted at the mean exchange rate. Equity,
with the exception of the results for the year, is calculated using historic exchange rates. Conversion of the profit
and loss items is on the basis of weighted average exchange rates. The currency conversion differences resulting
from the conversion of equity capital at historic exchange rates and the conversion of the Profit and Loss
Statement at average exchange rates are shown in the equity capital as not affecting the operating results.
Foreign exchange losses or gains contained in the individual financial statements included in the consolidation
are recognized as affecting the net income reported for the year.
The following rates of exchange were employed for the currency conversion of the individual financial statements
of foreign subsidiaries:
CODE RATE OF EXCHANGE
Average as of Dec. 31, 2011
Foreign currency/€
End of year on Dec. 31, 2011
Foreign currency/€
01. US dollar USD 0.71985 0.77286
02. Canadian dollar CAD 0.72597 0.75672
03. Pound sterling GBP 1.15281 1.19717
04. Mexican peso MXN 0.05769 0.05540
05. Hong Kong dollar HKD 0.09247 0.09949
06. Danish krone DKK 0.13424 0.13451
07. Russian ruble RUB 0.02437 0.02394
08. Indian rupee INR 0.01531 0.01455
09. Japanese yen JPY 0.00906 0.00998
10. Chinese yuan CNY 0.11198 0.12257
11. Swiss franc CHF 0.81191 0.82264
The average exchange rates were determined using weighted monthly average rates on the basis of the
Sennheiser Group’s turnover development. Here, the monthly average exchange rates represent a monthly
average based on the daily rates. This method was adopted in order to approximate the transaction-related
exchange rates within the Group as closely as possible.
Capital consolidation for company acquisitions on or before December 31, 2009, was based on the book value
method. If this capital consolidation leads to a positive gain, it is depreciated on a linear basis over a useful life
of four years.
The negative difference from capital consolidation was assigned to balance sheet profit.
Offsetting was undertaken on the basis of assigned values at the time of share purchase.
Receivables and payables involving the consolidated companies themselves are the subject of set-off.
Internal sales and other internal income within the Group are offset against the corresponding expenses.
Interim profits from finished goods and raw materials are charged against net income.
Interim profits relating to fixed assets are charged against net income.
D. NOTES ON THE CONSOLIDATED BALANCE SHEET
Intangible assets are valued at acquisition cost and are subject to scheduled linear depreciation over a useful
life between three and six years. Goodwill is generally amortized over a period of four years using the straight-line
method. The valuation of tangible assets is based on acquisition and/or production costs, subject to scheduled
depreciation over a useful life of two to 14 years for furniture and equipment as well as technical equipment
and machinery, and 50 years for buildings. Movable fixed assets are always depreciated on a linear or declining
balance basis; depending on the useful life of the assets in question, a switch will be made to the linear method
when most appropriate. For the companies in Germany, in keeping with tax regulation changes that took effect
on January 1, 2008, collective items were established for minor assets as defined by Section 6, subsection 2a,
of the German Income Tax Act (EStG). These collective items are written off at a rate of 20% per year in the year
of acquisition and in the subsequent four financial years.
In companies outside Germany, minor assets are written off in full in the year of acquisition and are shown as
disposals in the same year.
Interests in subsidiaries not fully consolidated and in associated companies are shown on the assets side of the
balance sheet at acquisition cost. Other loans are shown at acquisition cost.
Indemnity claims from life insurance concluded for the coverage of pension obligations are recognized at the
tax asset value, which equates to the acquisition cost and the fair value. Indemnity claims protected from the
claims of all other creditors were offset against the corresponding pension obligations.