Annual Report 2012 - Swiss Life

129 Consolidated Financial Statements
Deferred income taxes are recognised for all temporary differences between the carrying amounts of
assets and liabilities in the consolidated balance sheet and the tax bases of these assets and liabilities
using the balance sheet liability method. Current income taxes and deferred income taxes are charged
or credited directly to equity if the income taxes relate to items that are credited or charged in the
same or a different period, directly to equity.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will
be available against which they can be used. For unused tax losses a deferred tax asset is recognised to
the extent that it is probable that these losses can be offset against future taxable profits. Deferred tax
liabilities represent income taxes payable in the future in respect of taxable temporary differences.
A deferred tax liability is recognised for taxable temporary differences relating to investments in subsidiaries,
branches and associates, except where the Group is able to control the timing of the reversal
of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
Where the entity has a legally enforceable right to set off current tax assets against current tax liabilities
and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax
authority, the corresponding assets and liabilities are presented on a net basis.
2.18 Assets held for sale and associated liabilities
A disposal group consists of a group of assets to be disposed of, by sale or otherwise, together as a
group in a single transaction, and liabilities directly associated with these assets. Non-current assets
classified as held for sale and disposal groups are measured at the lower of the carrying amount and
the fair value less costs to sell. The carrying amount will be recovered through a highly probable sale
transaction rather than through continuing use. Assets held for sale and the associated liabilities are
presented separately in the balance sheet.
2.19 Financial liabilities
Financial liabilities are recognised in the balance sheet when the Swiss Life Group becomes a party to
the contractual provisions of the instrument. A financial liability is derecognised when the obligation
specified in the contract is discharged or cancelled or expires.
Financial liabilities at fair value through pro fit or loss
Financial liabilities at fair value are irrevocably designated as at fair value at initial recognition.
Financial liabilities are designated as at fair value through profit or loss in the following instances:
– Financial liabilities for the account and risk of the Swiss Life Group’s customers where the insurance
benefits are linked to unit values of investment funds or relate to private placement life insurance.
– Financial liabilities related to assets measured at fair value in order to reduce or eliminate a measurement
or recognition inconsistency.
– Financial liabilities with embedded derivatives.
Borrowings
Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings
are subsequently stated at amortised cost using the effective interest method. Any difference
Swiss Life – Annual Report 2012