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4 Significant accounting judgments, estimates and assumptions in applying accounting policies

The preparation of consolidated financial statements is dependent upon estimates and assumptions being made in applying the accounting policies for which management can exercise a certain degree of judgment. In applying the relevant accounting policies to the consolidated financial statements, certain assumptions and estimates have to be made about the future that may have a material influence on the amount and presentation of assets and liabilities, revenues and expenses as well as note disclosure information. The estimates used in preparing the consolidated financial statements and valuations are based on empirical values and other factors which are deemed appropriate in the given circumstances.

The following estimates used and assumptions made in applying the accounting policies have a critical influence on the consolidated financial statements.

Description   Judgemental decisions and estimation insecurity   Further information
Recoverability of Goodwill   Key assumptions such as projected cash flows, the discount rate (WACC) and long-term growth rate for determination of recoverable amount   Note 24
Defined benefit obligations   Key assumptions such as discount rate, future salary and pension increases, interest on pension plan savings. Employee contributions for funding shortfall, future pension rights of insured employees as well as life expectancy for valuing the defined benefit obligations   Note 10
Provisions for dismantlement and restoration costs   Future costs for dismantlement and restoration as well as the date of the dismantlement   Note 28
Provision for regulatory and competition law procedures   Probability of occurrence and amount of the expected cash outflow   Note 28
Allowances for doubtful receivables   Measurement of allowances taking into account historical experience with receivable losses   Note 18
Recognition of deferred tax assets   Possibility of achieving future taxable profits which can be offset against the available tax loss-carry forwards   Note 15
Useful lives of property, plant and equipment   Estimate of useful lives taking into account the expected use, expected physical wear, technology developments as well as past experience with comparable assets   Notes 3.7 and 23