Annual Report 2013 | Suomeksi |

1 Accounting policies and principles

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The financial statements of Fortum Oyj are prepared in accordance with Finnish Accounting Standards (FAS).
1.1 Sales
Sales include sales revenue from actual operations and exchange rate differences on trade receivables, less discounts and indirect taxes such as value added tax.
1.2 Other income
Other income includes gains on the sales of property, plant and equipment and shareholdings, as well as all other operating income not related to the sales of products or services, such as rents.
1.3 Foreign currency items and derivative instruments
Transactions denominated in foreign currencies have been valued using the exchange rate at the date of the transaction. Receivables and liabilities denominated in foreign currencies outstanding on the balance sheet date have been valued using the exchange rate quoted on the balance sheet date. Exchange rate differences have been entered in the financial net in the income statement.
Fortum Oyj enters into derivative contracts mainly for hedging foreign exchange and interest rate exposures.
Derivatives used to hedge balance sheet items e.g. bank accounts, loans or receivables are valued employing the exchange rate quoted on the balance sheet date, and gains or losses are recognised in the income statement. The interest element on forward contracts is accrued for the period.
Option premiums are treated as advances paid or received until the option matures, and any losses on options entered into other than for hedging purposes are entered as an expense in the income statement.
Interest income or expense for derivatives used to hedge the interest rate risk exposure is accrued over the period to maturity and is recognised as an adjustment to the interest expense of the liabilities.
1.4 Income taxes
Income taxes presented in the income statement consist of accrued taxes for the financial year and tax adjustments for prior years.
1.5 Property, plant and equipment and depreciation
The balance sheet value of property, plant and equipment consists of historical costs less depreciation and other deductions. Property, plant and equipment are depreciated using straight-line depreciation based on the expected useful life of the asset.
The depreciation is based on the following expected useful lives:
Buildings and structures 15 – 40 years
Machinery and equipment 3 - 15 years
Other intangible assets 5 - 10 years
1.6 Pension expenses
Statutory pension obligations are covered through a compulsory pension insurance policy or Group's own pension fund. Payments to Group's pension fund are recorded in the income statement in amounts determined by the pension fund according to the actuarial assumptions pursuant to the Finnish Employees' Pension Act.
1.7 Long-term incentive schemes
Costs related to the Fortum long-term incentive plans are accrued over the plan period and the related liability is booked to the balance sheet.
1.8 Provisions
Foreseeable future expenses and losses that have no corresponding revenue to which Fortum is committed or obliged to settle, and whose monetary value can be reasonably assessed, are entered as expenses in the income statement and included as provisions in the balance sheet.
1.9 Presentation of the notes
Information presented in the notes is given seperately for Fortum Group companies and for associated companies of the Group.
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