Anders Hedin Invest Årsredovisning 1
Impairment of non-financial assets Intangible ass
ets that have an undefined useful life or intangible assets that are not ready for use are not depreciated. Depreciated assets are assessed for impairment whenever events or changes in circumstances indicate that the reported value may not be recoverable. An impairment loss is made by the amount at which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset's fair value less the selling costs and its value in use. When assessing the impairment requirements, all assets are grouped at the lowest levels covering essentially independent cash flows (cash-generating units). For assets (other than goodwill) that have been previously written down, an assessment is made per each balance sheet date for determining whether the reversal should be made. Financial instruments Classification The Group classifies financial assets in the following categories: Financial assets revalued at fair value through profit or loss account, loan receivables and accounts receivable, and disposable financial assets. The classification depends on the purpose for which the financial assets were acquired. The management establishes classification of the financial assets on initial recognition. Financial assets valued at fair value through profit or loss account Financial assets valued at fair value through profit or loss account are financial assets that are held for sale. A financial asset is classified in this category if it is acquired mainly for the purpose of being sold in the short term. Derivatives are classified as if they are held for sale if they are not identified as hedges. Assets that fall into this category are classified as current assets if they are expected to be settled within 12 months, otherwise there are classified as fixed assets. Loan receivables and accounts receivable Loan receivables and accounts receivable are financial assets that are not derivatives, and which have established or establishable payments and are not listed on an active market. They are included under current assets, except for items with maturities more than 12 months after the at the end of each reporting period, and which are classified as fixed assets. The Group’s loans and accounts receivable comprise accounts receivable and other receivables in the balance sheet. Disposable financial assets Financial assets that can be sold are assets that are not derivatives and which have been identified as assets that can be sold or which have not been classified in any other category. They are included under fixed assets unless management plans to dispose of the asset within 12 months after the end of each reporting period. Accounting and valuation Purchases and sales of financial assets are recognized on the trade date, i.e. the date on which the Group commits to purchasing or disposing of the asset. Financial instruments are recognized initially at fair value plus transaction costs, which also applies to all financial assets that are not recognized at fair value through profit or loss account. Financial assets valued at fair value through profit or loss are recognized for the first time at fair value, whilst attributable transaction costs are recognized through profit or loss account. Financial assets are removed from the balance sheet when the right to receive cash flows from the instruments has expired or has been transferred and the Group has largely transferred all risks and benefits attributable to ownership. Disposable financial assets and financial assets valued at fair value through profit or loss are recognized after the acquisition date at fair value. Loan receivables and accounts receivable are reported after the point of acquisition at the accrued acquisition value. Cash and cash equivalents Cash and cash equivalents include, both in the balance sheet and cash flow statement, cash in hand, bank deposits and other current investments that mature within three months of the acquisition date. Accounts payable Accounts payable are obligations to settle payment for goods or services that have been acquired in the course of business operations. Accounts payables are classified as current liabilities if they fall due within one year. Otherwise, they are reported as non-current liabilities. Accounts payable are initially recognized at fair value and subsequently at accrued acquisition value using the effective interest method. Loans Loans from credit institutions are initially recognized at fair value, net after transaction costs. Loans are thereafter recognized at the acquisition cost and any differences between the amount received (net after transaction costs) and the repayment amount are recognized through profit or loss account, distributed across the term of the loan. Loans are classified as current liabilities if the maturity date is within 12 months, although the loan is expected to be renewed subject to the same capital repayment rate. Revolving credit facilities are reported in the Balance Sheet under Current liabilities to credit institutions. Accounts receivable Accounts receivables represent the amounts to be paid by customers for items sold or services purchased as part of the daily operations. If the payment is expected within one year, they are classified as operating assets. Otherwise, they are recognized as fixed assets. Accounts receivable are initially recognized at fair value and subsequently at accrued acquisition value using the effective interest method, less possible provision for depreciation. Holdings over which the Hedin Group does not have a controlling influence are recognized as other securities held as non-current assets, normally when the holding is equivalent to less than 20% of the voting rights. In the case of listed shares, the carrying value is the same as the fair value. In the case of unlisted shares and participations, where the fair value cannot be set reliably, these are valued at cost with a reduction for possible impairment. Changes in value are recognized directly in Other comprehensive income unless the decrease is material or long term. The impairment in that case is recognized through profit or loss account. When an asset is sold, the accumulated profit or loss recognized in Other comprehensive income is reversed to the Income Statement. Changes in fair value attributable to the financial assets category that are valued at fair value through profit or loss are recognized during the period in which they arise and are included under operating profit. Dividend revenue from securities in the financial assets category valued at fair value through profit or loss are reported in the Income Statement as part of Other operating income. Derivatives and hedging instruments Derivatives are recognized in the balance sheet on the contract date and are valued at fair value, both initially and in later revaluations. The Group only uses derivatives to a limited extent and does not apply hedge accounting. Inventories Inventories are reported at the lower of the acquisition value and net realizable value. The acquisition value is determined using the first-infirst-out method (FIFU). The net realizable value represents the estimated selling price in the current operations, less applicable variable selling costs. ANDERS HEDIN INVEST AB / ANNUAL REPORT / 2017 83