[7] Accounting policies

Judgments and estimates

The preparation of the IFRS consolidated financial statements requires the use of judgments and estimates for certain line items that affect recognition and measurement in the consolidated statement of financial position and consolidated income statement. The actual amounts realized may differ from estimates. Judgments and estimates are applied in particular:

  • in assessing the need for and the amount of impairment losses on intangible assets, property, plant, and equipment, receivables, and inventories
  • in determining the useful life of non-current assets
  • in classifying and measuring leases and in determining the lease terms
  • in recognizing and measuring defined benefit pension obligations and other provisions
  • in recognizing and measuring current and deferred income taxes
  • in recognizing and measuring assets acquired and liabilities assumed in connection with business combinations, and
  • in evaluating the stage of completion of contracts in the project business where the revenue is recognized over a period of time

The impact of a change to judgments or estimates is recognized prospectively when it becomes known and assumptions are adjusted accordingly.