Annual Report: - Gorenjska banka

2.4.1.4. Available for sale financial assets
Available for sale investments are those intended to be hold for an indefinite period of time, which
may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity
prices.
2.4.1.5. Reclassification of financial assets
The Bank did not reclassified financial assets in the period considered.
2.4.2. Measurement and recognition
Regular-way purchases and sales of financial assets at fair value through profit or loss, held to
maturity and available for sale are recognised on trade-date, the date on which the Bank commits to
purchase or sell the assets.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets
not carried at fair value through profit or loss. Financial assets carried at fair value through profit
or loss are initially recognised at fair value, and transaction costs are expensed in the income
statement. Available for sale financial assets and financial assets at fair value through profit or loss
are subsequently carried at fair value. Loans and receivables and held to maturity investments are
carried at amortised cost using effective interest rate.
Gains and losses arising from changes in the fair value of the 'financial assets at fair value through
profit or loss' category are included in the income statement in the period in which they arise. Gains
and losses arising from changes in the fair value of available for sale financial assets are recognised
directly in other comprehensive income, until the financial assets are derecognised or impaired.
At this time, the cumulative gain or loss previously recognised in other comprehensive oncome is
recognised in profit or loss. However, interest calculated using the effective interest method and
foreign currency gains and losses on monetary assets classified as available for sale are recognised
in the income statement. Dividend on available for sale equity instruments are recognised in the
income statement when the entity's right to receive payment is established.
The fair values of quoted investments in active markets are based on market prices. If there is no
active market for a financial asset, the fair value of those financial instruments are determined by
using valuation techniques.
Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or where the Bank has transferred substantially all risks and rewards of ownership.
Financial liabilities are derecognised when they are extinguished - that is, when the obligation is
discharged, cancelled or expires.
2.4.3. Fair value measurement principles
The fair value of financial instruments is based on their quoted market price at the balance sheet
date. If a quoted market price is not available or not active, the fair value of the instruments is
estimated using discounted cash flow techniques or pricing models.
Where discounted cash flow techniques are used, estimated future cash flows are based on the
management’s best estimates and the discount rate is a market related rate at the reporting date
for an instrument with similar terms and conditions. Where pricing models are used, inputs are based
on market related measures at the reporting date, where possible, but where this is not feasible, a
degree of judgement is required in establishing fair values.
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Gorenjska banka, d. d., Kranj
Annual Report 2011
Financial Report