Changes in accounting policies
The key changes in Unilever’s accounting policies are described below. These changes will also affect the 2004 comparative information presented in the 2005 consolidated financial statements and, unless otherwise stated, have been applied retrospectively in arriving at the opening balance sheet under IFRS as at 1 January 2004.
Goodwill and indefinite lived intangible assets IFRS 3 – ‘Business Combinations’
Under old GAAP Unilever capitalised and amortised goodwill and intangible assets purchased after 1 January 1998 over the period of their expected useful lives, up to a maximum of 20 years. Goodwill and intangible assets purchased prior to 1 January 1998 were written off in the year of acquisition as a movement in profits retained. On subsequent disposal of a business or brand acquired prior to 1 January 1998, purchased goodwill previously written off on acquisition was reinstated in arriving at the profit or loss on disposal.
Under IFRS, from 1 January 2004 onwards, Unilever will no longer apply systematic amortisation to goodwill and intangible assets with an indefinite life, but will instead test these assets for impairment on at least an annual basis. The amortization charge under old GAAP for all goodwill and indefinite lived intangible assets in 2004 was € 1 040 million. On disposal, goodwill acquired and written off on acquisition prior to 1 January 1998 will no longer be reinstated as part of the profit or loss on disposal.
We have applied the exemption in IFRS 1 relating to business combinations and therefore the carrying value under old GAAP as at 31 December 2003 of € 13 457 million for goodwill is its deemed cost at the date of transition to IFRS.
Under IFRS, the deemed cost of indefin ...