Unilever 2012 Annual Report Download - page 94

ABOUT UNILEVER GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
91Unilever Annual Report and Accounts 2012 Financial statements
1 Accountng nformaton and polces continued
rtcal accountng estmates and udgements
The preparation of financial statements requires management
to make judgements, estimates and assumptions in the
application of accounting policies that affect the reported
amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates. Estimates and
judgements are continuously evaluated and are based on
historical experience and other factors, including expectations
of future events that are believed to be reasonable. Revisions
to accounting estimates are recognised in the period in which
the estimate is revised and in any future period affected.
Information about critical judgements in applying accounting
policies, as well as estimates and assumptions that have the most
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are included in the following notes:
• separate presentation of items in the income statement
– note 3;
• measurement of defined benefit obligations – note 4B;
• key assumptions used in discounted cash flow projections
– note 9;
• utilisation of tax losses and recognition of other deferred tax
assets – note 6B;
• likelihood of occurrence of provisions and contingencies,
including tax investigations and audits – notes 19 and 20; and
• measurement of consideration and assets and liabilities
acquired as part of business combinations – note 21.
Recent accountng developments
Adopted by the roup
The following amended standards are relevant to the Group and
have been adopted for the first time in these financial statements,
with no material impact:
• IFRS 7 ‘Financial Instruments: Disclosures (Amendment)’.
• IAS 12 ‘Income Taxes (Amendment) – Deferred Taxes: Recovery
of Underlying Assets’.
Not adopted by the roup
The Group is currently assessing the impact of the following
new standards and amendments that are not yet effective.
The Group does not currently believe adoption of these standards
would have a material impact on the consolidated results or
financial position of the Group. All of the following new standards
and amendments are effective from 1 January 2013 unless
otherwise stated. Standards have not yet been endorsed by
the EU unless otherwise stated.
• IAS 19 ‘Employee benefits (Revised)’ changes a numberof
disclosure requirements for post-employment arrangements
and restricts the accounting options available for defined benefit
pension plans. The return on pension plan assets and finance
charge will be replaced by a net interest expense or income,
calculated by applying the liability discount rate to the net
defined benefit asset or liability. The Group expects this change
will result in an increase in finance costs of €150 million in 2012
(€179 million in 2011) with a corresponding increase in actuarial
gains or losses on pension schemes before tax when restated
under the new standard. The revised standard has been
endorsed by the EU.
• IFRS 13 ‘Fair value measurement’ explains how to measure
fair value and enhances fair value disclosures. The standard
does not significantly change the measurement of fair value
but codifies it in one place. This standard has been endorsed
by the EU.
• IFRS 9 ‘Financial instruments’, replaces the current
classification and measurement models for financial assets
with two classification categories: amortised cost and fair value.
Classification is driven by the business model for managing the
assets and the contractual cash flow characteristics. Financial
liabilities are not affected by the changes. Effective from
1 January 2015.
• Amendments to IAS 1 ‘Presentation of items of other
comprehensive income’ will result in items of other
comprehensive income that may be reclassified to profit or
loss being presented separately from items that would never be
reclassified. Endorsed by the EU and effective from 1 July 2012.
• Amendments to IAS 32 ‘Financial instruments: Presentation’
(effective from 1 January 2014) and IFRS 7 ‘Financial
instruments: Disclosures’ provide additional guidance on when
financial assets and liabilities may be offset. These standards
have been endorsed by the EU.
• Amendments to IFRS 10 ‘Consolidated financial statements’,
IFRS 11 ‘Joint arrangements’ and IFRS 12 ‘Disclosure of
interests in other entities’ on transition guidance.
• Amendments to IAS 1 ‘Presentation of Financial Statements’
clarifies comparative information requirements.
• Amendments to IAS 16 ‘Property, plant and equipment’
explains that servicing equipment is not classified as inventory
when used for more than one period.
• Amendments to IAS 32 ‘Financial Instruments: Presentation’
clarifies that the treatment of tax on distributions and equity
transaction costs must follow IAS 12 ‘Income taxes’.
• Amendments to IAS 34 ‘Interim Financial Reporting’ aligns
the disclosure required for segment assets and liabilities in
interim financial statements with IFRS 8 ‘Operating segments’.
The EU has endorsed the following standards, which will be
mandatory from 1 January 2014 with early application permitted.
This is a year later than the adoption dates in the standards
themselves, which require that entities complying with IFRS as
issued by the IASB apply them from 1 January 2013. The Group
will adopt these standards from 1 January 2013, which is a year
early from an EU perspective. The impact of the standards on
the consolidated results or financial position of the Group will
not be material.
• IFRS 10 ‘Consolidated financial statements’ replaces current
guidance on control and consolidation. The core principle that
a consolidated entity presents a parent and its subsidiaries
as if they were a single entity remains unchanged, as do the
mechanics of consolidation.
• IFRS 11 ‘Joint arrangements’ requires joint arrangements
tobeaccounted for as a joint operation or as a joint venture
depending on the rights and obligations of each party to the
arrangement. Equity accounting for joint ventures, already
used by Unilever, will become mandatory.
• IFRS 12 ‘Disclosure of interests in other entities’ requires
enhanced disclosures of the nature, risks and financial effects
associated with the Group’s interests in subsidiaries, associates,
joint arrangements and unconsolidated structured entities.
• IAS 27 ‘Separate financial statements (Revised)’. The standard
is revised to reflect the issue of IFRS 10.
• IAS 28 ‘Investments in associates and joint ventures (Revised)’.
The standard is revised to reflect the issue of IFRS 11.