996 - Banca Antonveneta

Valuation criteria and recognition of incomeThe allowances reflect the best possible estimate onthe basis of the elements at our disposal, andprovisions are recognized in the income statement.Where the temporal period is significant, allowancesare discounted using current market discount rates. The effectof such a discount is recognised in the income statement.Foreign currency transactionsRecognition criteriaForeign currency transactions are recorded in thebalance sheet currency upon initial recognition, byapplying the exchange rate in force on the transactiondate to the foreign currency amount.Valuation criteria and recognition of incomeAt the end of every financial year or quarter,statement entries in foreign currency are measured asfollows:monetary assets and liabilities are converted at theexchange rate in force on the closing date;non-monetary items valued at historic cost areconverted at the exchange rate valid on thetransaction date;non-monetary entries designated at fair value in aforeign currency are converted using the spotexchange rates in force on the closing date.Translation differences deriving from the settlement ofmonies or from the conversion of monies at exchangerates different from the initial conversion rates, orfrom conversion in previous financial statements, arerecorded in the income statement for the period inwhich they arise.When a profit or loss relating to a non-monetaryelement is recognised in shareholders' equity, thetranslation difference relating to the element is alsorecognised in shareholders' equity. On the other hand,while a profit or loss is recognised in the incomestatement, the relevant translation difference is alsorecorded in the income statement.The euro conversion of foreign investees’ financialstatements is carried out by applying the exchangerates in force on the reference balance sheet date.Translation differences in the consolidated investees'equity are recorded under consolidated reserves andrecognised in the income statement only in thefinancial year in which the equity investment isdisposed of.Tax Assets and LiabilitiesIncome taxes are calculated in accordance withtaxation laws in force. The tax burden is representedby total current and deferred taxes used indetermining the profit or loss for the year.Income taxes are recorded in the income statement,with the exception of taxes relating to asset andliability items of shareholders' equity.The Bank recognises the effects relating to current andanticipated taxes, by applying the existing tax rates.Allowances for income taxes are determined based ona prudential forecast of the current, prepaid anddeferred tax burden.Deferred taxes are calculated on all temporarydifferences in existence as at 31 December among thetax values of the assets and liabilities and therespective financial statement values, except fortemporary differences deriving from initial recognition:of goodwill;of an asset or liability in a transaction that is not abusiness combination and does not affect the profitfor the year for the purpose of the financialstatements, or the taxable profit or loss.Timing differences may be:taxable, that is they will be taxed in determiningthe tax income for future years when the bookvalue of the asset or liability is realised orextinguished;deductible, that is they will be deducted fordetermining the tax income for future years whenthe book value of the asset or liability is realised orextinguished.Prepaid tax assets represent income taxes that can berecovered in future years through:deductible timing differences;unpaid taxation liabilities carried forward.Prepaid tax assets are booked when there is arecovery possibility, which is valued based on the Bankand Group ability to generate continuing positive taxincome, due to the exercise of the option relating to"tax consolidation".Deferred tax liabilities represent taxes due in futureyears and referring to taxable timing differences.All deferred tax liabilities are recognised in thefinancial statements.Prepaid and deferred tax assets and liabilities aresystematically valued in order to take into account anychanges involving tax laws or rates.The tax allowance balance is further adjusted in orderto face the expenses that may arise from alreadynotified audits or in any case from existing litigationwith tax authorities.245