AnnuAl report 2010 - Walter Meier

42 / Consolidated FinanCial statements
Walter Meier / annual report 2010
Financial liabilities
FirSt-tiMe reCoGnition
For the purposes of iaS 39, financial liabilities are either classified
– as financial liabilities measured at fair value through profit or loss,
– as financial liabilities measured at amortized cost or
– as derivatives that were designated as hedging instruments and are effective as such.
Walter Meier specifies the classification of its financial liabilities when they are recognized for the first
time. When recognized for the first time, financial liabilities are measured at fair value; in the case of
financial liabilities they are measured at amortized cost plus directly attributable transaction costs.
the Group’s financial liabilities encompass trade accounts payable, other liabilities, derivative financial
instruments and financial liabilities.
SuBSequent MeaSureMent
the subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities measured at fair value through profit or loss:
Financial liabilities measured at fair value through profit or loss include financial liabilities held for trading
purposes as well as other financial liabilities that were classified as measured at fair value through profit
or loss when recognized for the first time.
Financial liabilities are classified as held for trading purposes if they are acquired for the purpose of selling
them in the near future. this category encompasses derivative financial instruments acquired by the
Group that do not fulfill the recognition criteria for hedging transactions laid down in iaS 39.
Gains or losses on financial liabilities held for trading purposes are recognized in the income statement.
Financial liabilities measured at amortized cost:
Following first-time recognition, interest-bearing loans are measured at amortized cost using the effective
interest method. Gains and losses are recognized in the income statement when the liabilities are deleted
from the accounts or they are part of any amortization.
Derivatives that are designated as hedging instruments and are effective as such:
Walter Meier acquires some derivative financial instruments to hedge financial risks economically but
does not operate an actual hedge accounting system for the purposes of iaS 39.
assets and liabilities from employee benefit plans
the employees of all Group companies receive retirement benefits within the framework of defined
benefit and defined contribution plans through separate trusts, insurance plans or unfunded plans. the
retirement plans are financed through regular contributions by the employer and the employee as well as
income from the plan’s assets.
in the case of defined contribution plans, the fixed contributions paid by the employer match all the
services supplied by the employees as of the balance sheet date. there is therefore no legal or constructive
obligation to provide supplementary financing for past years of service.
in the case of defined benefit plans, benefit expenses and obligations are established periodically by an
actuary using the projected unit credit method. the defined benefit obligations are measured at the
present value of estimated future cash flows by using the interest rate for top-quality industrial bonds in
the currency of the relevant benefit obligation. the plan’s assets are recorded and recognized at fair value.
Gains or losses resulting from adjustments to actuarial assumptions are recognized in the income
statement over the average remaining working life of the insured employee if they exceed ten percent of
the higher amount of the benefit obligation or the plan’s assets at the beginning of the reporting year. For
closed pension plans, any gains or losses resulting from adjustments to actuarial assumptions are recorded
in the same period as they incur.
an asset surplus is only capitalized to the extent that the present value represents a future economic
benefit for Walter Meier and from any actuarial losses that have not yet been recorded in the income
statement. any shortfall is shown in long-term liabilities. Surpluses and shortfalls of the various plans are
reported gross.