ARCO VARA AS - NASDAQ OMX Baltic

• financial assets at fair value through profit or loss – measured at fair value;
• held-to-maturity investments – measured at amortised cost;
• receivables - measured at amortised cost;
• available-for-sale financial assets – measured at fair value, except investments in equity
instruments whose fair value cannot be reliably measured, which are measured at cost.
Financial assets at fair value
At each balance sheet date, the financial assets measured at fair value are revalued to their fair values,
without any deduction for transaction costs it may incur on sale or other disposal. The fair value of
investments that are actively traded in organised financial markets is determined by reference to
quoted market bid prices at the close of business on the balance sheet date and rates of exchange of the
Bank of Estonia. For investments where there is no active market, fair value is determined using all
available information on the value of the investment (reference to the current market value of another
instrument, which is substantially the same and discounted cash flow analysis are used as valuation
techniques).
A gain and loss arising from changes in the fair value of a financial asset is recognised in profit or loss
(under “financial items and investment activity income (expenses)”), except regarding available-forsale
financial assets. Available-for-sale financial assets are measured at fair value with gains or losses
being recognised as a separate component of equity (as “other reserves”) until the investment is
derecognised or until the investment is determined to be impaired at which time the cumulative gain or
loss previously reported in equity is included in the income statement. If an available-for-sale asset is
impaired, an amount comprising the difference between its cost (net of any principal payment and
amortisation) and its current fair value, less any impairment loss previously recognised in profit or
loss, is transferred from equity to the income statement.
A gain and loss arising from disposal of financial assets measured at fair value as well as interests and
dividends from these assets are recognised in profit or loss (under “financial items and investment
activity income (expenses)”).
Receivables and held-to-maturity investments
Receivables, except those that the Group intends to sell in the near term, and held-to-maturity
investments are measured at amortised cost using the effective interest method. This cost is computed
for the whole term of financial assets considering any discounts or premiums and expenditures directly
related to the acquisition.
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has
been incurred, the amount of the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows discounted at the financial asset’s original
effective interest rate. The impairment loss of financial assets related to operating activities is
recognised under operating expenses (in the group of “general and administrative expenses”) and
impairment loss of financial assets related to investing activities is recognised under “financial items
and investment activity income (expenses)”.
The impairment loss is determined separately for financial assets that are individually significant.
Based on the previous experiences, the receivables overdue more than 180 days are considered to be
fully impaired. If there are any other indications that the book value of assets may be lower than their
recoverable amounts, the receivables are considered as impaired earlier.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is
recognised in the income statement as a reduction of the expense where the impairment was
initially recognised.
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