The financial statements of Novartis AG
comply with the requirements of the Swiss law for companies, the Code of Obligations
(SCO).
2. ACCOUNTING POLICIES
EXCHANGE
RATE DIFFERENCES: Current assets denominated in foreign currencies
are converted at year end exchange rates. Exchange differences arising from these
as well as those from business transactions are recorded in the income statement.
INTANGIBLE ASSETS: These are capitalized
and amortized over a period of between five to ten years.
FINANCIAL
ASSETS: These are valued at acquisition cost less adjustments for impairment
of value.
MARKETABLE SECURITIES:
These are valued at the lower of cost and market value.
PROVISIONS: Provisions are made to cover
general business risks of the Group.
3. FINANCIAL ASSETS
Included in financial assets are CHF
11 615 million (2004: CHF 9 081 million) of investments in subsidiaries and CHF
9 953 million (2004: CHF 2 526 million) of loans to subsidiaries and other related
entities.
The
principal direct and indirect subsidiaries and other holdings of Novartis AG are
shown on pages 184 and 185.
4. MARKETABLE SECURITIES
Included in marketable securities
are treasury shares with a net book value of CHF 1 013 million (2004: CHF 2 895
million) (see 5 and 6 below).
