1. Accounting Principles

The financial statements of Tallinn Stock Exchange for the year 1997 are composed in conformity with the Estonian Accounting Law.

The Income Statement format no. 1 has been used for recording the profit in the financial statements for the years 1996 and 1997.

The FIFO method has been used to calculate short-term stocks. The shares/stock are calculated as current assets, evaluated according to whichever is lower, the acquisition cost or net realisable value.

Trade debtor balances have been estimated on the balance sheet according to their collectibility. Receivables recorded in the financial statements are not older than 40 days. Receivables have not been previously recorded at the expenses.

Assets with an acquisition cost exceeding EEK 4,000 are recorded as fixed assets. The depreciation rates are calculated according to the useful life of every fixed asset. Depreciation has been calculated using the straight-line method.

The software subsidised by EBRD is depreciated under the same conditions (30% a year). The subsidy has been recorded in the liabilities as the long-term provision and will be decreased according to the calculated depreciation of subsidised software, recording the calculated amounts as the profit.

The Stock Exchange members’ long-term debts have been recorded under “guarantee fund” at long-term liabilities on the balance sheet. The financial means paid by the members of the Stock Exchange are kept in the guarantee fund, the usage of which has been fixed in the “Business Rules” of the Stock Exchange.

No changes in the reporting format and accounting principles were made in 1997.