Recognition of income and expenses
In accordance with IAS 18 (Revenue), net sales and other operating income are reported immediately upon rendering of the service or delivery of the goods. In the latter case, the timing is determined by the transfer of risk to the customer. Where customers are granted the right to return goods and cancel services, sales are recognised only if the probability of return can be reliably estimated. To this end, return rates are calculated on the basis of historical data and projected to future take-back obligations. No sales are recognised for the portion allocated to the expected returns; instead, a provision is recognised. Net sales are shown after deduction of value added tax, rebates and discounts. Gross amounts are shown that is, at the level of the customer payment (less sales tax and revenue reduction) where the company assumes the essential opportunities and risks associated with the sale of the goods or services. Net sales, that is margins, are shown for commission transactions, as defined by the company. Sales revenues from contracts with several contractual components (for example, sale of goods plus additional services) are realised when the respective contractual components have been fulfilled. Sales are realised based on the estimated relative fair value of the individual contractual components.
Operating expenses are recognised as expenses upon availment of service or their causation.
Financial income and financial expenses at METRO GROUP primarily comprise dividends and interest. As a rule, dividends are recognised when the legal claim to payment arises. Interest is recognised as income or expenses; where applicable on an accrual basis using the effective interest method. Debt capital interests that are directly attributable to the acquisition, construction or production of a so-called qualified asset represent an exception as they must be included in the cost of the asset capitalised pursuant to IAS 23 (Borrowing Costs).
Income taxes concern direct taxes on income and deferred taxes. As a rule they are recognised in profit or loss unless they are related to business combinations or an item that is directly recognised in equity or other comprehensive income.