össur annual report2009 - Euroland

A derivative is presented as a non-current asset or a noncurrent
liability if the remaining maturity of the instrument
is more than 12 months and it is not expected to be
realised or settled within 12 months. Other derivatives are
presented as current assets or current liabilities.
HEDGE ACCOUNTING
The Company designates certain hedging instruments,
which include derivatives and non-derivatives in respect of
foreign currency risk, as either cash flow hedges or hedges
of net investments in foreign operations. Hedges of foreign
exchange risk on firm commitments are accounted
for as cash flow hedges.
At the inception of the hedge relationship the entity documents
the relationship between the hedging instrument
and hedged item, along with its risk management objectives
and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on
an ongoing basis, the Company documents whether the
hedging instrument that is used in a hedging relationship
is highly effective in offsetting changes in fair values or
cash flows of the hedged item.
The hedging reserve within equity represents the cumulative
portion of gains and losses on hedging instruments
deemed effective in cash flow hedges. The cumulative
deferred gain or loss on the hedging instrument is reclassified
to profit or loss only when the hedged transaction
affects the profit or loss, or is included as a basis adjustment
to the non-financial hedged item, consistent with the
relevant accounting policy.
Note 28 sets out details of the fair values of the derivative
instruments used for hedging purposes. Movements in
the hedging reserve in equity are also detailed in note 24.
HEDGES OF NET INvESTMENTS IN FOREIGN OPERATIONS
Any gain or loss on the hedging instrument relating to the
effective portion of the hedge is recognised in equity in the
foreign currency translation reserve.
Gains and losses deferred in the foreign currency translation
reserve are recognised in profit or loss on disposal of
the foreign operation.
4. critical accounting JudgeMents and
key sources of estiMation uncertainty
In the application of the Company’s accounting policies,
which are described in note 3, the directors are required
to make judgments, estimates and assumptions about
the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and
associated assumptions are based on historical experience
and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is
revised if the revision affects only that period or in the
period of the revision and future periods if the revision
affects both current and future periods.
Determining whether goodwill is impaired requires an
estimations of the value in use of the cash-generating
units to which goodwill has been allocated. The value in
use calculation requires the entity to estimate the future
cash flows expected to arise from the cash-generating unit
and a suitable discount rate in order to calculate present
value.
As described at 3.15 above, the Company reviews the estimated
useful lives of property, plant and equipment at the
end of each annual reporting period.
All amounts in thousands of USD 73 annual report 09
Össur hf. consolidated financial stateMents 2009