1.2 Use of estimates and judgments
Financial reporting requires management to make estimates and exercise judgment in applying the Group’s accounting policies, both of which can affect the reported amounts of assets, liabilities, contingent liabilities, and contingent assets at the date of the financial statements, and reported amounts of income and expenses during the reporting period. These accounting estimates and judgments are periodically reviewed. During the year, Rieter updated the method used to estimate the inventory allowance by extending the historical consumption look back period from 24 to 36 months. The change reflects updated information indicating longer consumption cycles and improved predictive reliability. The change is accounted for as a change in accounting estimates and applied prospectively.
The areas involving significant accounting estimates and judgments are related to the accounting of the acquisitions in 2026 and 2024 (see notes 2.1 and 8.9) as well as the topics included in the following notes:
Note | Description of significant accounting estimates and judgments |
|---|---|
4.3 Inventories | Assumptions associated with the allowance for inventories |
4.5 Intangible assets | Assumptions associated with the capitalization of development costs for research and development activities |
4.6 Goodwill | Assumptions associated with the impairment test |
4.8 Provisions | Estimates associated with the measurement of provisions |
7.2 Employee benefit plans | Assumptions in relation to defined benefit plans |
8.1 Income taxes | Assumptions in relation to the measurement of income tax assets and liabilities |