Tiscali 2001 Annual Report Download - page 71

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63
Companies of irrelevant entity are entered at their cost value. The listing of participations
valued with the cost method is enclosed.
Moreover, its should be noted that as regards foreign subholdings, the sub-consolidated
financial statements drafted for the purpose by the subsidiaries themselves were used for
consolidation purposes.
3) REFERENCE DATE
The Consolidated Financial Statements were prepared on the basis of the draft
Financial Statements approved by the respective Boards of Directors as of December
31, 2001 or, where these were not available, on the basis of financial statement data
forwarded by each of the Companies on the basis of consolidation procedures.
4) CONSOLIDATION PRINCIPLES
The Financial Statements used for consolidation are, as explained above, those of each
Company for the period in question. Said statements have been reclassified and rectified
with the aim of adapting them to the accounting principles and valuation criteria of the
Parent Company, which are in compliance with the rules set out in articles 2423 and
thereafter of the Civil Code and with the accounting principles recommended by CONSOB.
In preparing the Consolidated Financial Statements, the assets and liabilities as well as
profits and losses of the Companies included in the consolidation were listed in their
entirety. On the other hand, the receivables and payables, income and charges and the
profits and losses originating from operations between Companies included in the
consolidation have been offset. The book value of shareholding in Companies included in
the consolidation is offset against their corresponding shareholders' equity quotas in the
subsidiary/affiliated Companies. The book value of shares owned or quotas has been
deducted from the book value of participations and from the shareholders' equity of the
Companies included in the consolidation. Said amounts are posted in the Consolidated
Balance Sheet under the headings: "Own shares" and "Reserve for own shares".
The difference between the book value of participations, which is offset, and the
corresponding shareholders' equity quota, which is taken on, is shown as an adjusting
entry to the consolidated shareholders' equity. In the event of acquisitions, the above
mentioned difference is listed among the assets and liabilities of Companies included in the
consolidation. The residual value (if any), if negative is entered in an account called
"Consolidation reserve"; if it can be referred to expected unfavourable economic results, it
is shown in a designated account called "Consolidation fund for future risks and liabilities".
If the residual value (if any), is positive, it is shown among the assets in an account called
"Consolidation difference".
The amount of equity and reserves of subsidiary Companies which corresponds to third
parties' participations is shown in an account of the shareholders' equity called "Third
parties' equity and reserves"; the portion of the consolidated profit and loss statement
Consolidated Financial Statements