(3) Summary of Significant Accounting Policies
Use of Estimates
The preparation of the Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting periods. In making our estimates, we consider historical and forecast information, as well as regional and industry economic conditions in which the Company or its customers operate, changes to which could negatively impact our estimates, in particular when assessing revenues and costs, the valuation and recoverability of receivables, investments and other assets, and tax positions. Actual results could differ from original estimates.
Our financial position, income, and cash flows are subject to numerous risks and uncertainties. Factors that could affect the Company’s future financial statements and cause actual results to differ materially from current expectations include, but are not limited to, further adverse changes in the global economy, consolidation and intense competition in the software industry, declines in customer demand in the most important markets in Europe, the United States, and Asia, as well as fluctuations in currency exchange rates.
Basis of Measurement
The Consolidated Financial Statements have been prepared based on the historical cost basis except for the following:
- Derivative financial instruments are measured at fair value
- Available for sale financial assets are measured at fair value
- Liabilities for cash-settled share-based payment arrangements are measured at fair value
Where applicable, information about the methods and assumptions used in determining fair values is disclosed in the notes specific to that asset or liability.
Business Combinations
We account for all business combinations using the purchase method. As of the date of acquisition, we allocate the purchase price to the fair values of the assets acquired and liabilities assumed.
