Unilever 2011 Annual Report Download - page 122

119
NOTES TO THE COMPANY ACCOUNTS UNILEVER PLC
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 2006.
The accounts are prepared under the historical cost convention
except for the revaluation of financial assets classified as
‘available-for-sale investments’ or ‘fair value through profit
orloss’, and ‘derivative financial instruments’ in accordance
withthe accounting policies set out below which have been
consistentlyapplied.
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 a maximum of 20 years.
These assets are held at cost less accumulated amortisation.
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.
Financial instruments
The company’s accounting policies under United Kingdom
generallyaccepted accounting principles (UK GAAP), namely
FRS25 ‘Financial Instruments: Presentation’, FRS 26 ‘Financial
Instruments: Measurement’ and FRS 29 ‘Financial Instruments:
Disclosures’, are the same as the Unilever Group’s accounting
policies under International Financial Reporting Standards (IFRS)
namely IAS 32 ‘Financial Instruments: Presentation’, IAS 39
‘Financial Instruments: Recognition and Measurement’ and
IFRS7 ‘Financial Instruments: Disclosures’. Thepolicies are set
out under the heading ‘Capital and treasury risk management’
innote 16 to the consolidated accounts on pages 93 and 99. The
company is taking the exemption for financial instruments
disclosures, because IFRS 7 disclosures are given in note 15 to
the consolidated accounts on pages 90 to 92.
Unilever Annual Report and Accounts 2011
Financial statements
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 UKGAAP, namely FRS 25 ‘Financial Instruments:
Presentation’, FRS20‘Share Based Payments’ and Urgent Issues
Task Force abstract 38 ‘Accounting for ESOP Trusts’ (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 other reserves.
Dividends
Under FRS 21 ‘Events after the Balance Sheet Date’, 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 do not recognise a liability in
anyperiod for dividends that have been proposed but will not be
approved until after the balance sheet date. This holds for
externaldividends as well as intra-group dividends paid to
theparentcompany.