The financial statements are prepared in accordance with the Norwegian accounting act (regnskapsloven) for medium sized entities.
Use of estimates
Preparation of the financial statements in accordance with the Norwegian accounting act demands the use of estimates. Furthermore, the use of the companies accounting principles demands the management to use judgments.
Classification and assessment of balance sheet items
Assets held for long term ownership or use are classified as non-current assets. Non-current assets are measured at cost. Current assets and short-term liabilities normally include items that are due less than twelve months after the balance sheet date, as well as items that relates to cost of goods sold and inventories. Current assets are measured at the lowest of cost and fair value.
Receivables are classified as current assets if they are due less than twelve months after the balance sheet date. First year installments on long term receivables and liabilities are classified as current assets and short-term liabilities. Some items are classified differently and are specified below.
Fixed assets are recognized and depreciated linearly to residual value over the assets expected useful life. Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. In the case of changes in depreciation plan, the effect of the change is distributed over the remaining years. Maintenance of assets are recognized over profit and loss. Improvements are capitalized on the asset and depreciated over the same period as the asset. The difference between maintenance and improvements is evaluated against the assets condition at the time when the asset was acquired. Land is not depreciated.
Expenses for renting assets are recognized over profit and loss. Prepaid expenses are distributed over the remaining rental period.
Impairment of fixed assets
When there are indications that the carrying amount of a fixed asset is higher than its expected fair value, an impairment test is conducted. The test is performed at the lowest level of assets which have separate cash flows. If the carrying amount is higher than both fair value and recoverable amount, the asset is impaired to the highest of fair value and recoverable amount. Recoverable amount is the present value of future cash flows from the asset. Previous impairments, except for impairment of goodwill, is reversed if the basis of the impairment is no longer present.
Investments in shares and subsidiaries
Investments in shares and subsidiaries are recognized at cost. The cost price increases when funds are provided by capital increase, or when group contributions are made to subsidiaries. Dividends received are recognized as dividend in profit and loss. Dividend/group contributions from subsidiaries are recognized in the same year as the subsidiary recognize the provision. Dividend from non-subsidiaries are recognized as financial income in the same year as the dividend decision was made. Investments in shares and subsidiaries are impaired if there are indications of impairments that is not temporary.
Accounts receivables and other receivables are recognized at par net of any provisions for expected loss. Provisions for expected loss are based on individual assessments of each receivable. In addition, a general provision is made for expected loss on receivables.
Income tax expense in the profit and loss includes both paid tax in the period and changes in deferred tax. Deferred tax is calculated at 22 % tax rate based on temporary differences between accounting values and tax values, as well as any tax loss carry forward at the balance sheet date. Tax increasing and tax reducing temporary differences that are reversed or can be reversed in the same period, are netted.
Recognition of deferred tax assets on net reducing temporary differences that is not netted or tax loss carry forward, is justified by net positive expected future cash flow. Deferred tax asset that can be capitalized and deferred tax liability is recognized as the net amount in the balance sheet.
Tax on group contributions made that are recognized as an increase of cost of shares, and tax on group contributions received that are booked directly over equity, is also booked directly against tax payable in the balance sheet (it is recognized over tax payable if the group contribution has effect on tax payable, and over deferred tax if the group contribution has effect on deferred tax).
In the case of repurchase of own shares, the cost price including any direct attributable costs, are recognized as change in equity. Own shares are presented separately under equity in the balance sheet at par value. Any consideration in excess of par value is recognized as a reduction of other equity. Gain or loss and transactions in own shares is not recognized over profit and loss but recognized over equity.
Cash flow statement
The cash flow statement is prepared in accordance with the indirect method. Cash and cash equivalents includes cash, bank deposits and other short term, liquid investments that can be immediately, and with insignificant currency risk, be converted to known cash amounts, as well as remaining term of less than three months from the date of acquisition.
* Carrying amount of share capital is kr 444 730. The company has one type of shares and all shares carry the same voting rights.
* 4Service Holding AS has 6 245 208 own shares as of 31.12.2021, this makes up 1,4 % of the share capital and is 54 546 lower than 31.12.2020.
Investments in subsidiaries and joint ventures are recognized at cost.