Notes to financial statements Basis of preparation
Notes to the consolidated financial statements1 The basis of preparation comprises the notes to the financial statement relating to:
Notes to financial statements Basis of preparation Notes to financial statements Basis of preparation |
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1. Reporting entity Notes to financial statements Basis of preparation [Name of the Company] (the ‘Company’) is domiciled in [Country X]. The Company’s registered office is at [address]. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the ‘Group’). The Group is primarily involved in manufacturing paper and paper-related products, cultivating trees and selling wood (see Note 6(A)). |
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2. Basis of accounting These consolidated financial statements have been prepared in accordance with IFRS. They were authorised for issue by the Company’s board of directors on [date]. Details of the Group’s accounting policies are included in Note 45. Notes to financial statements Basis of preparation |
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3. Functional and presentation currency These consolidated financial statements are presented in euro, which is the Company’s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. Notes to financial statements Basis of preparation |
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4. Use of judgements and estimates In preparing these consolidated financial statements, management has made judgements and estimates that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. |
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4 – A. Judgements Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes: Notes to financial statements Basis of preparation Note 8(D) – revenue recognition: whether revenue from made-to-order paper products is recognised over time or at a point in time; |
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4 – B. Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties at 31 December 2018 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes: Note 8(D) and Note 29 – revenue recognition: estimate of expected returns; Notes to financial statements Basis of preparation Note 16(B) – determining the fair value of biological assets on the basis of significant unobservable inputs; Note 22(C) – impairment test of intangible assets and goodwill: key assumptions underlying recoverable amounts, including the recoverability of development costs; Note 32(C)(ii) – measurement of ECL allowance for trade receivables and contract assets: key assumptions in determining the weighted-average loss rate; and i. Measurement of fair values A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. |
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The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the chief financial officer. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the Group’s audit committee. When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Notes to financial statements Basis of preparation If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. |
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The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in the following notes: |
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Note 12(B) – share-based payment arrangements2; |
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IFRS 13 BC184 |
Note 34(C)(i) – acquisition of subsidiary3. |
Continue reading – 5. Changes in significant accounting policies (will follow)