Chairman’s Letter
Notes
Bayer Links
Investor Relations
Financial Statements
3. Effects of new accounting pronouncements
Accounting standards applied for the first time in 2007
In 2007, the following accounting standards and interpretations had to be applied for the first time. None of the following standards had a material impact on the Group’s net assets, financial position, results of operations or earnings per share in the current period.
In August 2005, the IASB issued an amendment to IAS 1 (Presentation of Financial Statements) relating to the disclosure of an entity’s capital. Under this amendment, information on an entity’s capital management must be presented in the Notes to the financial statements for annual periods beginning on or after January 1, 2007.
In August 2005, the IASB issued IFRS 7 (Financial Instruments: Disclosures), which is to be applied for annual periods beginning on or after January 1, 2007. IFRS 7 requires the disclosure of information on the significance of financial instruments for an entity’s financial position and performance, the nature and extent of risks arising from financial instruments, and how such risks are managed. IFRS 7 considerably extends the previous disclosure requirements for financial instruments, which have to be presented by class or using the categories defined in IAS 39.
In July 2006, the IFRIC issued IFRIC 10 (Interim Financial Reporting and Impairment), which is to be applied for annual periods beginning on or after November 1, 2006. This interpretation states that impairment losses recognized in an interim period on goodwill, investments in equity instruments, or investments in financial assets carried at cost may not be reversed in subsequent interim financial statements or in annual financial statements.
In August 2005, the IASB issued an amendment to IAS 1 (Presentation of Financial Statements) relating to the disclosure of an entity’s capital. Under this amendment, information on an entity’s capital management must be presented in the Notes to the financial statements for annual periods beginning on or after January 1, 2007.
In August 2005, the IASB issued IFRS 7 (Financial Instruments: Disclosures), which is to be applied for annual periods beginning on or after January 1, 2007. IFRS 7 requires the disclosure of information on the significance of financial instruments for an entity’s financial position and performance, the nature and extent of risks arising from financial instruments, and how such risks are managed. IFRS 7 considerably extends the previous disclosure requirements for financial instruments, which have to be presented by class or using the categories defined in IAS 39.
In July 2006, the IFRIC issued IFRIC 10 (Interim Financial Reporting and Impairment), which is to be applied for annual periods beginning on or after November 1, 2006. This interpretation states that impairment losses recognized in an interim period on goodwill, investments in equity instruments, or investments in financial assets carried at cost may not be reversed in subsequent interim financial statements or in annual financial statements.
Newly issued accounting standards
In November 2006, the IASB published IFRS 8 (Operating Segments), which will replace IAS 14 (Segment Reporting), the existing standard in this field. The new standard was endorsed by the European Union in November 2007. Under IFRS 8, segment reporting must be based on the information used internally by management to identify operating segments and to evaluate their performance. IFRS 8 is to be applied for the first time for annual periods beginning on or after January 1, 2009. The Bayer Group does not believe that the application of this standard will have a significant impact on the presentation of its segment reporting.
In September 2007, the IASB issued amendments to IAS 1 (Presentation of Financial Statements). These include proposals for renaming certain sections of the financial statements, the obligation to publish an opening balance sheet for the previous financial year in certain circumstances, separate presentation of changes in equity arising from transactions with owners and with non-owners, separate disclosure by component of amounts removed from stockholders’ equity and recognized in income, and disclosure of the related income tax effect by component in the statement of recognized income and expense. This interpretation is to be applied for annual periods beginning on or after January 1, 2009. The Bayer Group is currently evaluating the impact that the application of the amendments may have on the Group’s financial position, results of operations or cash flows.
In March 2007, the IASB issued amendments to IAS 23 (Borrowing Costs) requiring the capitalization of interest on borrowings made to acquire, construct or produce a qualifying asset. The previous option of immediately recognizing such borrowing costs in income has been withdrawn. Since interest on borrowed capital directly attributable to qualifying assets was already capitalized in the past, the amendments will have no impact on the consolidated financial statements of the Bayer Group.
In June 2007, the IFRIC issued the interpretation IFRIC 13 (Customer Loyalty Programmes), which addresses the recognition of expenses for and revenues from such programs. This interpretation is to be applied for annual periods beginning on or after July 1, 2008. The Bayer Group is currently evaluating the impact that application of the interpretation may have on the Group’s financial position, results of operations or cash flows.
In July 2007, the IFRIC issued the interpretation IFRIC 14 (IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction). This interpretation addresses the “asset ceiling” rule for plan assets that exceed pension obligations and the recognition of statutory minimum funding requirements in plan assets. This interpretation is to be applied for annual periods beginning on or after January 1, 2008. The Bayer Group is currently evaluating the impact that application of the interpretation may have on the Group’s financial position, results of operations or cash flows.
In January 2008, the IASB published the revised standards IFRS 3 (Business Combinations) and IAS 27 (Consolidated and Separate Financial Statements). Under IFRS 3 (revised 2008), business combinations continue to be accounted for by the purchase method. The changes affect, for example, the accounting treatment of any minority interest in goodwill and its recognition in stockholders’ equity. IAS 27 (revised 2008) contains rules for the consolidation and treatment of changes in ownership interests. IFRS 3 (revised 2008) and IAS 27 (revised 2008) are to be applied for the first time in annual periods beginning on or after January 1, 2009. Earlier application is permitted provided that both revised standards are applied simultaneously. The Bayer Group is currently evaluating the impact that the application of these revised standards may have on future business combinations and the presentation of the consolidated financial statements.
In February 2008, the IASB issued amendments to IAS 32 (Financial Instruments: Presentation) and IAS 1 (Presentation of Financial Statements). These refer particularly to the distinction between equity and debt in accounting for company capital to which cancellation rights are attached (puttable financial instruments). Puttable financial instruments previously had to be classified as a liability, whereas in the future such cancellable instruments are to be classified as equity in certain circumstances. The amendments are to be applied for the first time for annual periods beginning on or after January 1, 2009. The Bayer Group is currently evaluating the impact that the application of these amendments may have on the Group’s financial position, results of operations or cash flows.
In September 2007, the IASB issued amendments to IAS 1 (Presentation of Financial Statements). These include proposals for renaming certain sections of the financial statements, the obligation to publish an opening balance sheet for the previous financial year in certain circumstances, separate presentation of changes in equity arising from transactions with owners and with non-owners, separate disclosure by component of amounts removed from stockholders’ equity and recognized in income, and disclosure of the related income tax effect by component in the statement of recognized income and expense. This interpretation is to be applied for annual periods beginning on or after January 1, 2009. The Bayer Group is currently evaluating the impact that the application of the amendments may have on the Group’s financial position, results of operations or cash flows.
In March 2007, the IASB issued amendments to IAS 23 (Borrowing Costs) requiring the capitalization of interest on borrowings made to acquire, construct or produce a qualifying asset. The previous option of immediately recognizing such borrowing costs in income has been withdrawn. Since interest on borrowed capital directly attributable to qualifying assets was already capitalized in the past, the amendments will have no impact on the consolidated financial statements of the Bayer Group.
In June 2007, the IFRIC issued the interpretation IFRIC 13 (Customer Loyalty Programmes), which addresses the recognition of expenses for and revenues from such programs. This interpretation is to be applied for annual periods beginning on or after July 1, 2008. The Bayer Group is currently evaluating the impact that application of the interpretation may have on the Group’s financial position, results of operations or cash flows.
In July 2007, the IFRIC issued the interpretation IFRIC 14 (IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction). This interpretation addresses the “asset ceiling” rule for plan assets that exceed pension obligations and the recognition of statutory minimum funding requirements in plan assets. This interpretation is to be applied for annual periods beginning on or after January 1, 2008. The Bayer Group is currently evaluating the impact that application of the interpretation may have on the Group’s financial position, results of operations or cash flows.
In January 2008, the IASB published the revised standards IFRS 3 (Business Combinations) and IAS 27 (Consolidated and Separate Financial Statements). Under IFRS 3 (revised 2008), business combinations continue to be accounted for by the purchase method. The changes affect, for example, the accounting treatment of any minority interest in goodwill and its recognition in stockholders’ equity. IAS 27 (revised 2008) contains rules for the consolidation and treatment of changes in ownership interests. IFRS 3 (revised 2008) and IAS 27 (revised 2008) are to be applied for the first time in annual periods beginning on or after January 1, 2009. Earlier application is permitted provided that both revised standards are applied simultaneously. The Bayer Group is currently evaluating the impact that the application of these revised standards may have on future business combinations and the presentation of the consolidated financial statements.
In February 2008, the IASB issued amendments to IAS 32 (Financial Instruments: Presentation) and IAS 1 (Presentation of Financial Statements). These refer particularly to the distinction between equity and debt in accounting for company capital to which cancellation rights are attached (puttable financial instruments). Puttable financial instruments previously had to be classified as a liability, whereas in the future such cancellable instruments are to be classified as equity in certain circumstances. The amendments are to be applied for the first time for annual periods beginning on or after January 1, 2009. The Bayer Group is currently evaluating the impact that the application of these amendments may have on the Group’s financial position, results of operations or cash flows.
Bookmark this page
E-mail this page
Advanced Search
