annual financial statement 2011 - conwert Immobilien Invest SE

CONWERT IMMOBILIEN INVEST SE
ANNUAL FINANCIAL 2011 STATEMENT ANNUAL REPORT 2011
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DERECOGNITION OF FINANCIAL ASSETS
An asset is derecognised when the contractual rights to the cash flows arising from the asset
expire. An asset is also derecognised when all major risks and rewards associated with the asset
are transferred.
IMPAIRMENT OF FINANCIAL ASSETS
As of every balance sheet date, the conwert Group tests its financial assets or groups of assets to
identify any objective evidence of impairment. A financial asset or group of financial assets is only
considered to be impaired when one or more events have occurred since the initial recognition
of the asset (a “loss event“) and this loss event has an impact on the estimated future cash flows
of the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment
includes the following: signs that a debtor or group of debtors has significant financial
difficulties; default or delinquency in interest or principal payments; the probability of bankruptcy
or other financial reorganisation; and when observable data indicates there will be a measurable
decrease in estimated future cash flows, e.g. due to an increase in delayed payments or economic
conditions that correlate with default.
An impairment charge is recognised to receivables through a valuation adjustment account when
there are substantial objective indications that the Group will not be able to realise the full amount
of the receivables. The impairment charge is calculated as the difference between the carrying
amount and the present value of expected future cash flows. Material financial assets are tested
individually for impairment, while financial assets that are not considered to be material are tested
individually or together. If the conwert Group determines that there are no indications of impairment
to an individually tested financial asset – whether the asset is considered material or not –
the asset is aggregated together with other financial assets that have similar credit risk profiles,
and the group of assets is subsequently tested for impairment. In cases where the impairment
tests of individual assets led to the recognition of an impairment charge, these assets are not
included in any further aggregated testing.
If the estimated impairment increases or decreases in a later accounting period due to another
event, the previously recognised impairment charge is increased or decreased through the valuation
adjustment account with a corresponding recognition to profit or loss.
Receivables are derecognised when they are classified as uncollectible. If a derecognised receivable
is subsequently reclassified as collectible because of an event that occurred after derecognition,
the relevant amount is immediately recognised to profit or loss.
The conwert Group also tests available-for-sale financial assets for objective signs of impairment
as of every balance sheet date. For available-for-sale equity instruments, a significant or lasting
decline in the fair value of the instrument below its acquisition cost would represent an objective
indication of impairment. If there are any indications of impairment, an impairment charge is recognised
to profit or loss at an amount equal to the difference between the acquisition cost and the
current fair value.
Debt instruments are considered to be impaired when the expected future cash flows are likely to
be cancelled or delayed. If debt instruments classified as available for sale are considered to be
impaired, interest is still recorded on the reduced carrying amount of the relevant asset based on
the original effective interest rate; this interest is included under finance revenue.
The reversal of impairment charges to equity instruments takes place through equity, and for debt
instruments through profit or loss.