Today, Wavin - Jaarverslag.com

Wavin Annual Report 2010 | page 86(g) Other non-current investmentsThe other non-current investments mainly comprise long term credit facilities extended to customers and associates,other investments and guarantees deposited, after providing for doubtful debts.(h) Deferred tax assetsLong term tax assets resulting from temporary differences between fi nancial statements and fi scal valuations are capitalisedas deferred tax assets as long as it is probable they will result in a future cash infl ow. If a Group company is not expecting topay profi t taxes for the coming years due to negative results, the deferred tax asset is not recognised. Tax losses carriedforward for compensation with future profi ts that will probably materialise in the foreseeable future are also included underdeferred tax assets.(i)Other current investmentsInvestments in debt and equity securities held by the Group are classifi ed as being held for trading and are stated at fairvalue, with any resultant gain or loss being recognised in the income statement.(j)InventoriesInventories are stated at the lower of cost (see note 3 (x)) and net realisable value. Net realisable value is the estimated sellingprice in the ordinary course of the business, less the estimated selling costs. The cost of inventories is based on the fi rst-infi rst-out principle and includes expenditures incurred in acquiring the inventories, production or conversion costs and othercosts incurred in bringing it to their existing location. Costs for self-manufactured inventories and work in progress include anappropriate share of overhead costs based on normal operating capacity.(k) Trade and other receivablesTrade receivables, receivables from associates, prepaid expenses and accrued income are recognised initially at fair value.Subsequent to initial recognition, receivables are measured at amortised cost using the effective interest method lessimpairment losses (see note 3 (l)). Discounted drafts with recourse are accounted for as debtors with the correspondingliability in interest-bearing loans and borrowings.(l)(i)ImpairmentFinancial assets (including receivables)A fi nancial asset not carried at fair value through profi t or loss is assessed at each balance sheet date to determine whetherthere is objective evidence that it should be impaired. A fi nancial asset is impaired if objective evidence indicates that a lossevent has occurred after the initial recognition of the asset. All individual signifi cant receivables are assessed for specifi cimpairment. Receivables that are not individually signifi cant are collectively assessed for impairment. If any such indicationexists, the asset’s recoverable amount is estimated. Losses are recognised in the income statement and refl ected in anallowance account against receivables. When a subsequent event causes the amount of impairment to decrease, thedecrease in impairment loss is reversed through the income statement.(ii) Non-financial assetsThe carrying amounts of the Group’s non-fi nancial assets other than other current investments (see note 3 (i)), inventories (seenote 3 (j)) and deferred tax assets (see note 3 (h)) are reviewed at each balance sheet date to determine whether there is anyindication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill, andintangible assets that have indefi nite useful lives or that are not yet available for use, the recoverable amount is estimatedeach year at the same time.An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit (CGU) exceeds itsrecoverable amount. A CGU is the smallest identifi able asset group that generates cash fl ows that largely are independentfrom other assets and groups. Impairment losses are recognised in the income statement.Impairment losses recognised in respect of CGUs are allocated fi rst to reduce the carrying amount of any goodwill allocatedto the units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis.(iii) Calculation of recoverable amountThe recoverable amount of other non-current investments is calculated as the net present value of expected future cashfl ows, discounted at the original effective interest rate inherent in the asset. Assets with a short duration are not discounted.The recoverable amount of other assets is the greater of the fair value less cost to sell and value in use. In assessing the valuein use, the estimated cash fl ows are discounted to their net present value using an average pre-tax discount rate that refl ectscurrent market assessments of the time value of money and the risks specifi c to the asset. For an asset that does notgenerate largely independent cash infl ows, the recoverable amount is determined for the CGU to which the asset belongs.