| | Proceeds
from sales of available-for-sale securities were USD 4.4 billion and USD 5.9 billion
in 2005 and 2004 respectively. Gross realized gains were USD 88 million and USD
75 million on those sales in 2005 and 2004 respectively. Gross realized losses
were USD 70 million and USD 228 million on those sales in 2005 and 2004 respectively.
The gain or loss on these sales was determined using the weighted average cost
method. As of December 31, 2005 there were no unrealized losses on equity securities
(2004: nil) and USD 15 million on debt securities (2004: nil) that existed for
more than 12 months. The maturities of the available-for-sale
debt securities included above at December 31, 2005 are as follows:
34.2)
INVENTORY IMPAIRMENT REVERSAL: According to the group policy, pre-launch
inventory in the Pharmaceuticals Division is impaired as the technical feasibility
is not granted until final marketing approval is obtained. If the final approval
is granted and the shelf live of the pre-launch inventory permits its sale, the
impairment is reversed under IFRS. Under US GAAP such a reversal is not permitted.
34.3) ASSOCIATED COMPANIES: Investments
in associ-ated companies include purchase price adjustments and amortization differences
on account of the differences in implementation rules for US GAAP SFAS 142 and
IFRS 3 on business combinations and on investments in associated companies. The
impact of the US GAAP adjustments on the net result and on the carrying value
of the investments in Roche and Chiron are as follows:  | | As
of December 31, 2005, the market value of the Group’s interest in Roche and Chiron
exceeded the US GAAP carrying value by USD 3.6 billion and USD 2.0 billion, respectively.
34.4) INTANGIBLE ASSETS: The accounting
treatment for the 1996 merger of Sandoz and Ciba-Geigy under IFRS is different
from the accounting treatment under US GAAP. For IFRS purposes the merger was
accounted under the uniting of interests method, however, for US GAAP the merger
did not meet all of the required conditions of Accounting Principles Board Opinion
No. 16 for a pooling of interests and therefore was accounted for as a purchase
under US GAAP. Under US GAAP, Sandoz was deemed to be the acquirer with the assets
and liabilities of Ciba-Geigy being recorded at their estimated fair values and
the results of Ciba-Geigy being included from December 20, 1996. Under US GAAP,
the cost of Ciba-Geigy to Sandoz was approximately USD 28.5 billion. All of the
purchase price was allocated to identified property, plant & equipment and intangible
assets with a definite useful life. The fair value
of long-term assets on the date of acquisition was reduced proportionally by a
negative goodwill of USD 7.3 billion. The components
of equity and the income statement adjustments related to the US GAAP purchase
accounting adjustment of Ciba-Geigy for 2005 and 2004 are as follows:  | |
