Unilever 2007 Annual Report Download - page 78

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Notes to the consolidated accounts Unilever Group
76 Unilever Annual Report and Accounts 2007
Financial statements continued
1 Accounting information and policies (continued)
Retirement benefits
Pension accounting requires certain assumptions to be made in order
to value our obligations and to determine the charges to be made
to the income statement. These figures are particularly sensitive to
assumptions for discount rates, mortality, inflation rates and expected
long-term rates of return on assets. Details of assumptions made are
given in note 20 on pages 103 and 104.
Taxation
The Group is subject to taxes in numerous jurisdictions. Significant
judgement is required in determining worldwide provision for taxes.
There are many transactions and calculations during the ordinary
course of business for which the ultimate tax determination is
uncertain. The Group recognises liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the
income tax and deferred tax provisions in the period in which such
determination is made.
Provisions
Provision is made, among other reasons, for legal matters, disputed
indirect taxes, employee termination costs and restructuring where
a legal or constructive obligation exists at the balance sheet date and
a reliable estimate can be made of the likely outcome. The nature of
these costs is such that judgement has to be applied to estimate the
timing and amount of cash outflows.
Recent accounting developments
We are currently assessing the impact of the following revised
standards or interpretations. These changes are not expected to have
a material impact on the Group’s results of operations, financial
position or disclosures.
•Amendments in IAS 1 ‘Presentation of Financial Statements’
(effective from 1 January 2009) requiring information in financial
statements to be aggregated on the basis of shared characteristics
and introducing a statement of comprehensive income.
•Amendments in IAS 23 ‘Borrowing Costs’ (effective from 1 January
2009) removing the option for expensing borrowing costs and
requiring mandatory capitalisation of qualifying borrowing costs.
•IFRS 8 'Operating Segments' (effective from 1 January 2009)
introduces a management reporting approach to segment
reporting. The information reported would be that which
management uses internally for evaluating the performance of
operating segments and allocating resources to those segments. It
replaces disclosure requirements in IAS 14 'Segment Reporting'.
•IFRIC 14 ‘Limit on a defined benefit asset minimum funding
requirement and their interaction’ (effective from 1 January 2008)
clarifies that a pension plan surplus can be recognised only when a
company has the unconditional right to receive the benefits of it,
regardless of whether the surplus is immediately available.
•Amendments in IFRS 3 ‘Business Combinations’ and IAS 27
‘Consolidated and Separate Financial Statements’ (effective from
1 July 2009) changing and updating the existing requirements or
practice on accounting for partial acquisitions, step acquisitions,
acquisition-related costs, contingent consideration and transactions
with non-controlling interests.