10 Associates and joint arrangements

Investments in associates and joint ventures are initially recognized at cost, including transaction costs. Subsequent to initial recognition, these investments are accounted for by the equity method, which involves recognition in the income statement of dsm-firmenich’s share of the associate’s or joint venture’s profit or loss for the year determined in accordance with the accounting policies of dsm-firmenich. Any other results at dsm-firmenich in relation to associated companies are recognized under Other results related to associates and joint ventures. dsm-firmenich’s interest in an associate or joint venture is carried in the balance sheet at its share in the net assets of the associate or joint venture together with goodwill paid on acquisition, less any impairment loss.

When dsm-firmenich’s share in the loss of an associate or joint venture exceeds the carrying amount of that entity, the carrying amount is reduced to zero. No further losses are recognized unless dsm-firmenich has responsibility for obligations relating to the entity.