Annual Financial Statements 2010 of Bank Austria

Consolidated Financial Statements in accordance with IFRSs
A – Accounting policies (CoNTINuED)
IFRS 9 Financial Instruments: Classification and Measurement
The issued version of IFRS 9 reflects the first phase of the IASB project to replace IAS 39 and deals with the classification and measurement of
financial assets as defined in IAS 39. The standard is to be applied for financial years beginning on or after 1 January 2013. In further phases the
IASB will deal with the classification and measurement of financial liabilities, hedging relationships and derecognition. The project is expected to
be completed in early 2011. Application of the first phase of IFRS 9 affects the classification and measurement of financial assets of the Group.
For a comprehensive presentation of potential effects, Bank Austria will only quantify the effects in conjunction with the other phases once they
have been published.
IFRIC 14 Prepayments of a Minimum Funding Requirement (amended)
The amended IFRIC 14 is to be applied retrospectively for financial years beginning on or after 1 January 2011. The amendment provides guidance
on how to determine the recoverable amount of a net pension asset. Under the amendment, entities may treat prepayments of a minimum
funding requirement as an asset. The amendment is not expected to have any effects on the consolidated financial statements of Bank Austria.
IFRIC 17 Distributions of Non-cash Assets to Owners, and IFRIC 18 Transfers of Assets from Customers
The amendments issued by the IASB to IFRIC 17 and IFRIC 18, which are required to be applied for the first time for financial years beginning on
or after 1 July 2009, were not applied in the Bank Austria Group.
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
IFRIC 19 is to be applied for financial years beginning on or after 1 July 2010. The interpretation makes it clear that equity instruments issued to
a creditor to extinguish a financial liability are “consideration paid”. The equity instruments issued are measured at fair value. If fair value is not
reliably determinable, the equity instruments issued are to be measured at the fair value of the liability extinguished. Gains and losses are immediately
recognised in the income statement. The application of this interpretation will have no effect on the consolidated financial statements of
Bank Austria.
A.5 – Significant accounting policies
Business combinations
When a subsidiary is acquired, the fair values of its identifiable assets, including identifiable intangible assets, and liabilities are offset against the
cost of acquisition. The difference between the cost of acquisition and the fair value of net assets is recognised in the balance sheet as goodwill
if such difference cannot be attributed to intangible assets, e.g. a customer base. Pursuant to IFRS 3 and IAS 36, goodwill is not amortised. Goodwill
arising on business combinations after 1 April 2004 is stated in the currency of the acquired company and translated at the closing rate.
Goodwill is tested for impairment at least once a year.
As at the date of acquisition, equity of foreign subsidiaries which prepare their financial statements in foreign currency is translated into euros.
Gains and losses arising on the foreign currency translation of equity of foreign subsidiaries are recorded directly in equity as at the dates of the
subsequent statements of financial position.
Goodwill arising on acquisitions of subsidiaries and other equity interests before 1 January 1995 has been offset against retained earnings.
When a subsidiary is acquired, the calculation of non-controlling interests is based on the fair values of assets and liabilities.
Foreign currency translation
The consolidated financial statements are prepared in euro. Foreign currency transactions are translated into euro on initial recognition by applying
the exchange rate at the date of the transaction.
Foreign currency translation is performed in accordance with IAS 21. Monetary assets and liabilities denominated in currencies other than the
euro are translated into euros at market exchange rates prevailing at the end of the reporting period. Forward foreign exchange transactions not
yet settled are translated at the forward rate prevailing at the end of the reporting period.
For the purpose of foreign currency translation of the financial statements of foreign subsidiaries, which are prepared in a currency other than the
euro, the middle exchange rate prevailing at the end of the reporting period has been applied to items in the statement of financial position and
the annual average exchange rate has been applied to income statement items.
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