3 General accounting policies
3.1 Scope of consolidation
The consolidated financial statements are based on the annual financial statements of the individual Group companies controlled directly or indirectly by Schindler Holding Ltd. Control exists if the Group is exposed, or has rights, to variable returns and has the ability to impact those returns through its power over a company. Control is presumed to exist when the Group owns, directly or indirectly, more than half of the voting rights of a company.
Changes in the interests held in Group companies are recognized as equity transactions provided control is retained. If control is lost, the difference between the consideration received and the net assets disposed of is reported as other income.
For information on businesses acquired in the reporting year, refer to note 23.
3.2 Translation of foreign currency
The functional currency of Group companies is generally the currency used in the primary economic environment in which they operate. Transactions in foreign currencies are translated at the exchange rate that applied on the transaction date. Exchange rate gains and losses resulting from such transactions or from the revaluation of foreign currency assets and liabilities at year-end rates are recognized as financial income or expenses.
For consolidation purposes, the financial statements of Group companies in foreign currencies are translated into Swiss francs (CHF). Assets and liabilities are translated using year-end rates, while comprehensive income and cash flows are translated using average rates or the spot rate for significant transactions.
The change in accumulated exchange differences from the translation of foreign companies is reported in other comprehensive income (OCI). If a Group company is sold, or if part of it is sold and control is lost, the accumulated exchange differences are reclassified to the income statement.
The exchange rates for the most significant foreign currencies are as follows:
|Year-end rate||Average rate||Year-end rate||Average rate|