Notes - TANDBERG asa


Note 1
Accounting principles

BASIC PRINCIPLES The annual financial statements consist of the income statement, balance sheet, cash flow and notes which have been prepared in accordance with the Norwegian Companies Act, Norwegian Accounting Act and generally accepted accounting principles applicable in Norway as of 31 December 2005 (NGAAP). To make the annual financial statements easier to read, the statements have been prepared in summary form. The necessary details are given in the notes. The notes are thus an integral part of the annual financial statements.

The financial statements give a true and fair view of assets and liabilities, financial standing and result.

TANDBERG asa accounts are recorded in Norwegian Krone (NOK) and presented in NOK in the Annual Report.

The annual financial statements are based on fundamental principles with regard to historic cost, comparability, continued operation, congruence and prudence. Transactions are recorded at the value of the consideration on the transaction date. Income is recognized when earned and costs are expensed in the same period as the income to which they relate is recognized. The accounting principles are set out in further detail below. When actual figures are not available at the date of preparation of the accounts, generally accepted accounting principles require management to make estimates to the best of their belief for use in the profit and loss statement and balance sheet. Differences may arise between estimated and actual figures.

CLASSIFICATION AND VALUATION OF BALANCE SHEET ITEMS Current assets and current liabilities include all items which fall due for payment within one year of the date they were created, as well as items related to goods circulation. All other items are classified as fixed assets/long-term liabilities.

Current assets/liabilities are valued at the lower of acquisition cost or actual value.

Fixed assets are valued at acquisition cost. If the actual value of an asset is lower than book value, and this is due to factors which are not expected to be temporary, the asset is written down to actual value. A write-down will be reversed if the reason for it ceases to apply.

Subsidiaries are valued using the cost method in the company’s accounts unless a write-down has been necessary. A write-down to actual value is made if there is a decrease in value which cannot be regarded as temporary and the write-down is considered necessary in accordance with standard accounting practice.

FOREIGN CURRENCY Current transactions denominated in foreign currency are recorded at the exchange rate on the transaction date. Liquid assets, receivables and liabilities in foreign currency are converted at the exchange rate on the balance sheet date.

Currency gains and losses related to short-term items are shown gross as Financial income and Financial expenses.

TANGIBLE FIXED ASSETS Fixed assets are recorded in the balance sheet at acquisition cost, less accumulated depreciation and write-downs. If the actual value of the asset is lower than book value, and this is due to factors which are not expected to be temporary, the asset is written down to actual value. The direct costs of maintaining fixed assets are recognized as they are incurred as operating costs, but additional costs or improvements to fixed assets are added to the asset’s cost price and depreciated with that asset.

PENSION SCHEMES The Company has a defined contribution plan and pension costs are recorded in the profit and loss statement as incurred.

SHARE OPTION PLAN The Company has a share option program, which covers all employees. Social security tax related to any increase in the value of subscription rights is accrued over the term of the option program based on the share price at the balance sheet date.

TAXES The tax charge in the profit and loss statement includes both taxes payable for the period and the change in deferred taxes. The change in deferred taxes reflects future taxes payable which arise as a result of the year’s activities. Deferred taxes are taxes which relate to accumulated profits but which will be payable in later periods. Deferred taxes are calculated using the liability method of net positive timing differences between accounting and taxation balance sheet values including tax losses carried forward. Deferred tax allowances are recognized as an asset in the balance sheet to the extent that they are considered capable of being realized.

CASH FLOW ANALYSIS The cash flow analysis has been prepared using the indirect method. Cash and cash equivalents consist of cash, bank deposits and other short-term, liquid investments which can immediately and without significant price risk be converted to a known cash amount and which have a maturity date less than three months from the acquisition date.