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20
financial statements 2011
The Group has changed its accounting policy
applied to financial statements in relation to the ac-
counting of actuarial gains and losses of defined benefit
plans. Previously, actuarial gains and losses were rec-
ognized in the balance sheet according to the corridor
method. Net accumulated actuarial gains and losses
that were not recognized in the income statement
were recognized if, at the end of the previous financial
year, they exceeded whichever is the greatest of the
following: 10% of the current value of the defined
benefit obligation on the day in question (before de-
ducting the plan assets) or 10% of the fair value of the
plan assets on the day in question. Concerning defined
benefit plans, the portion of actuarial gains and losses
recognized in the income statement was the amount
exceeding the gains and losses divided by the expected
average remaining working lives of the participating
employees.
According to the accounting policy applied to the
financial statements, the Group immediately recognizes
all actuarial gains and losses through profit or loss,
presenting them in the items of the comprehensive in-
come statement. Under this accounting policy, actuarial
gains and losses are recognized more quickly than un-
der the corridor method that was applied previously.
The accounting policy has been applied retrospectively
and the Group has adjusted the comparison data to
comply with this new accounting policy. In the 2010
financial statements, the impact of this retrospective
application is as follows:
December 31, 2010
Other comprehensive income:
Actuarial losses
-203 eur 1000
Taxes relating to oci items
53 eur 1000
Balance sheet:
Deferred tax assets
53 eur 1000
Pension obligations
203 eur 1000
Net change in earnings
-150 eur 1000
Provisions and Contingent
Liabilities
A provision is recognized when the Group has an
existing legal or factual obligation resulting from an
earlier event, the fulfillment of the payment obligation
is probable and its magnitude can be reliably quantified.
Provisions are valued according to the current value of
the expenditure required to settle the obligation. The
provision is discounted if the time value has fundamen-
tal significance for the size of the provision.
Provisions in the Group include rental expenses
for empty business premises (onerous contracts),
other restructuring provisions and pension expense
provisions concerning unemployment pension insur-
ance.
A restructuring provision is made when the Group
has compiled a company-specific restructuring plan
and launched its implementation or informed the
affected parties accordingly. A provision for environ-
mental obligations is made when the Group has an
obligation, based on environmental legislation and the
Group’s environmental responsibility policies, which
relates to site decommissioning, repairing environmen-
tal damage or moving equipment from one place to
another.
A contingent liability is an obligation that may arise
as a result of earlier events and whose existence will
be confirmed only if an uncertain event outside the
control of the Group is realized. A contingent liability is
also considered to be an existing obligation where the
payment obligation will probably not need to be ful-
filled or whose magnitude cannot be reliably defined.
Contingent liabilities are disclosed in the Notes.
Income Taxes for the Year and
Deferred Taxes
The tax liability in the income statement is made up
of income tax for the financial year and deferred tax.
Taxes are recognized through profit or loss, except
when they relate directly to shareholders’ equity or
to items recognized in the comprehensive income
statement. Thus, tax is also recognized in the relevant
items. Income tax for the financial year is calculated on
the basis of the valid tax rate for the country in ques-
tion. Tax is adjusted with any taxes related to earlier
financial years.
Deferred taxes are calculated from temporary dif-
ferences between the carrying amount and the taxable
amount. In taxation, deferred tax is not recognized for
non-deductible goodwill, or for subsidiaries’ undistrib-
uted profits if the temporary difference is expected to
exist in the foreseeable future.
The largest temporary differences are caused by
the depreciation of tangible fixed assets, the meas-
urement of derivative contracts at fair value, defined
benefit plans and fair value assessments made in
conjunction with acquisitions.
Deferred taxes are calculated using the official
tax rates valid on the balance sheet date or those
that were approved in practice by the end date of the
reporting period.
Deferred tax assets are recognized only to the
extent that, in the future, taxable profits against which
the temporary difference can be utilized are likely
to be available. Recognition of deferred tax assets