Stora Enso is a Finnish pulp and papermanufacturing company. It discloses in its 1999 consolidated AnnualReport, the following items:

Excerpted from the Consolidated balancesheet

Assets
€ mill.	1999	1998
(…)
Shares, associated companies	165.5	334.1
Shares, other companies	280.4	128.8

In the notes to its financial statements, the Stora Ensoprovides explanations relating to these two items:

Excerpts from the notes

Note 12 Associated companies
€ mill.	1999	1998
Historical cost Jan. 1	289.9	273.1
Translation difference	1.8	-14.8
Additions	20.2	42.3
Disposals	-36.8	-1.2
Transfers to other companies	-141.9	-9.4
Historical cost Dec. 31	133.2	290.0
Equity adjustments to investments in associated companies Jan.1	44.2	44.8
Equity earnings in associated companies	9.7	10.0
Translation difference	-27.3	-0.1
Dividends received during the year	-3.1	-7.2
Taxes	-2.4	-2.6
Disposals and other changes	11.2	-0.7
Equity adjustments Dec. 31	32.3	44.2
Carrying value of investments in associated companies on Dec.31	165.5	334.2
Note 14 Shares in other companies
€ mill.	1999	1998
Acquisition cost Jan. 1	128.8	57
Translation differences	0.5	-1.1
Additions	13.4	68.8
Disposals	-7.1	-4.8
Write-downs	3	-0.5
Transfers from associated companies	141.9	9.4
Carrying amount Dec. 31	280.4	128.8

In addition, the company explains in the notes that “associatedcompanies (voting rights between 20% and 50%) are consolidatedusing the equity method” and “the income statements of foreignsubsidiaries are translated into Euros using the average rate forthe accounting period. The balance sheets of foreign subsidiariesare translated using the rate prevailing on the balance sheetday.”

Pechiney, a French group operating worldwide in aluminum andpackaging materials, discloses in its 1999 Annual Report thefollowing note:

Note 7 – Investments in Equity Affiliates
(in millions of €)	1999	1998	1997
Beginning of period	334	337	354
Changes:
- Equity in net income of Quensland Alumina Limited, PechineyReynolds Québec Inc. and in partnerships	7	7	10
- Equity in net income of other affiliates	41	10	20
- Dividends received from equity affiliates	(12)	(12)	(20)
- New investments or share capital increases	-	-	42
- Divestments and reduction in ownership percentage	(73)	-	(71)
- Change from equity method to consolidation	-	-	(9)
- Change from consolidation to equity method	457	-	7
- Translation adjustment	22	(10)	5
- Other	1	2	(1)
End of period	777	334	337

Required

1. A) Using the Stora Enso data

1. Associated companies: explain the computation of the historicalcost at year-end and the meaning of each component of thiscomputation.
2. Where will be found, other than in the notes, the carryingvalue of associated companies at year-end?
3. Other companies: explain the computation of carrying amount atyear-end and the meaning of each component of thiscomputation.
4. Double-check the carrying value of other companies at year-end.What is the usefulness to an investor or shareholder of the 1999figure of €280.4 millions shown both in the balance sheet and inthe notes?

1. B) Comparison: notes 12 and 14 in Stora Enso’sannual report and note 7 in Pechiney’s annual report have the samepurpose. Compare and contrast the computations and reportingchoices made by each company.