Income statement

Recognition of income and expenses

In accordance with IAS 18 (revenue), 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. Sales are shown after deduction of value added tax, rebates and discounts. They are recognised at the time the essential opportunities and risks associated with the sale of the goods or services have transferred to the company. Net sales 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. The prorata sales are realised based on the estimated fair value of the individual contractual components.

Performance-based government grants attributable to future periods have been recognised on an accrual basis according to the corresponding expenses. Performance-based grants for subsequent periods which have already been received are shown as deferred income and the corresponding income is proportionally recognised in subsequent periods.

Operating expenses are recognised as expenses upon use of the service or on the date of their causation.

METRO’s financial result consists primarily of interest income and expenses. As a general rule, dividends are recognised as income when the legal claim to payment arises. Debt capital interests that are directly attributable to the acquisition or production of a so-called qualified asset represent an exception as they must be included in the acquisition or production costs of the asset capitalised pursuant to IAS 23 (borrowing costs).

Income taxes

Income taxes concern direct taxes on income and deferred taxes. As a rule, they are recognised through profit or loss unless they are related to business combinations or an item that is directly recognised in equity or other comprehensive income.