Group Management Report Corporate Governance Environment, Safety, and Corporate Social Responsibility Consolidated Financial Statements 95 as a result of a past event, it is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The warranty provision is estimated based on the average warranty expenses of the last two to three years, depending on the division they relate to. Based on this experience, the Company calculates a warranty percentage, applies it to net product sales and recognizes the estimated obligation in the warranty provision. The provision is adjusted to reflect changes in estimates. Other provisions include personnel related obligations measured in accordance with IAS 19. Leases In accordance with IAS 17, “Leases,” lease agreements in which ALTANA, as the lessee, assumes substantially all the risks and rewards are classified as finance leases. Accordingly, the leased item is recognized at the lower of its fair value or the present value of the minimum lease payments. The item is depreciated over the shorter of its estimated useful life or the lease term. Simultaneously, a corresponding lease obligation is recognized and measured at amortized cost by applying the effective interest method. All other lease agreements are classified as operating leases and lease payments are expensed as incurred. Use of Estimates and Assumptions The preparation of the consolidated financial statements requires management to make esti- mates and assumptions that affect the amounts of assets, liabilities and disclosure of contingent assets and liabilities reported at the end of any given period and the amounts of revenues and expenses for that reported period. Actual results may differ from these estimates. At the reporting date, management mainly made the following key assumptions con- cerning the future and identified key sources of estimation uncertainty that might pose a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year: Employee Benefit Obligations: The measurement of the pension plans is based on the projected unit credit method applying current parameters as of the reporting date, including the expected discount rate, the rate of compensation and pension increase, and the return on plan assets as of the reporting date. A significant change in the underlying parameters could have a material impact on the defined benefit obligations (see note 24). Impairments: Impairment testing for goodwill, other intangible assets and property, plant and equipment is generally based on discounted estimated future cash flows generated from the continuing use and ultimate disposal of the assets. Factors such as lower than anticipated operating income (EBIT) and resulting reduced net cash flows as well as changes in the discount rates used could lead to impairments. For information on the carrying amounts of goodwill, other intangible assets and property, plant and equipment see notes 13 and 14.
E_ALT_GB15_160317_online
To see the actual publication please follow the link above