ANNUAL REPORT 2008/09 - Sonova

Expenses from defi ned benefi t plans are charged
to the appropriate income statement heading within
the operating results.
Actuarial gains and losses, resulting from changes
in actuarial assumptions and diff erences between
assumptions and actual experiences are recognized
in the period in which they occur in the statement
of recognized income and expense in equity.
Other long-term benefi ts
Other long-term benefi ts mainly comprise length of
service compensation benefi ts which certain Group
Companies are required to provide in accordance
with legal requirements in the respective countries.
These benefi ts are accrued, and the corresponding
liabilities are included under “Other provisions”.
Equity compensation benefi ts
The Board of Directors of Sonova Holding AG, the
Management Board and certain management
and senior employees of other Group Companies
participate in equity compensation plans. The
fair value of all equity compensation awards granted
to employees is estimated, using an option pricing
model, at the grant date and recorded as an expense
over the vesting period. The expense is
charged to the appropriate income statement heading
within the operating result and an equivalent
increase in equity is recorded.
3.4 Financial assets
Sonova classifi es its fi nancial assets in the following
categories: fi nancial assets at fair value through
profi t or loss, loans and receivables, held-to-maturity
investments, and available-for-sale fi nancial assets.
The classifi cation depends on the purpose for
which the investments were acquired. Management
determines the classifi cation of its investments
at initial recognition and reclassifi es them whenever
their intention or ability changes. All purchases
and sales are recognized on the settlement date.
72 CONSOLIDATED FINANCIAL STATEMENTS
Financial assets at fair value through
profi t or loss
Financial assets at fair value through profi t or loss
are assets held for trading, acquired for the purpose
of generating a profi t from short-term fl uctuations
in price. Derivative fi nancial assets and deriva
tive fi nancial liabilities are always deemed as
held for trading unless they are designated and eff ective
hedging instruments. Financial assets held
for trading are measured at their fair value plus initial
transaction costs. Fair value changes on a fi nancial
asset held for trading are included in net profi t or loss
for the period in which they arise. Assets in this
category are classifi ed as current assets if they are
either held for trading or are expected to be realized
within 12 months.
Loans and receivables
Loans and receivables are non-derivative fi nancial
assets with fi xed or determinable payments that are
not quoted in an active market. They arise when
the Group provides money, goods or services directly
to a debtor with no intention of trading the re -
ceivable. They are included in current assets, except
for maturities of more than 12 months. These are
classifi ed as non-current assets. Loans and receivables
are included in trade and other receivables in
the balance sheet. Loans are measured at amortized
cost. Amortized cost is the amount at which the
fi nancial asset is measured at initial recognition mi -
nus principal repayments, plus or minus the cumulative
amorti zation using the eff ective interest method
of any diff erence between the initial amount
and the maturity amount, minus any reduction for
impairment or uncollectibility. The eff ective in -
terest method is a method calculating the amortized
cost of a fi nancial asset and allocating the interest
income over the relevant period. The eff ective interest
rate is the rate that exactly discounts estimated
future cash payments or receipts through the expected
life of the fi nancial instrument or, when
appropriate, a shorter period to the net carrying
amount of the fi nancial asset.