Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

1.8 Impairment of assets
Assets that are subject to amortisation and depreciation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units).
1.9 Financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables;
held-to-maturity investments; and available-for-sale financial assets. The classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this
designation at every reporting date.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as
held for trading unless they are designated as hedging instruments. Assets in this category are classified as current assets.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed 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 receivable. They are
included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current
assets. Loans and receivables are classified as trade receivables, or other receivables and financial assets in the balance sheet (Note 6 and
Note 8).
(c) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold to maturity. During the years presented in these consolidated financial
statements the Group did not hold any investments in this category.
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