2.8 MEUR - Gorenje - Gorenje Group

Financial assets measured at amortised cost
ANNUAL REPORT 2011
The Company considers evidence of impairment for financial assets measured at amortised cost (loans and receivables
and held-to-maturity investment securities) at both a specific asset and collective level. All individually
significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively
assessed for any impairment that has been incurred but not yet identified. Assets that are not individually
significant are collectively assessed for impairment by grouping together with similar risk characteristics.
In assessing collective impairment the Company uses historical trends of the probability of default, the timing
of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested
by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s
original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account
against loans and receivables or held-to-maturity investment securities. Interest on the impaired asset continues
to be recognised. When a subsequent event (e.g. repayment of debt by the debtor) causes the amount of
impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
In line with the Accounting Manual, the Company considers evidence of impairment for receivables based on
the observance of criteria pertaining to the maturity and collateralisation of receivables. Thereafter, it is corrected
by an individual estimate.
Available-for-sale financial assets
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in
the fair value reserve in equity, to profit or loss. The cumulative loss that is reclassified from equity to profit or loss
is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current
fair value, less any impairment loss recognised previously in profit or loss. Changes in impairment provisions
attributable to application of the effective interest method are reflected as a component of interest income.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase
can be related objectively to an event occurring after the impairment loss was recognised in profit or
loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However,
any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other
comprehensive income.
(ii) Non-financial assets
The carrying amounts of the Company’s non-financial assets, other than investment property, inventories and
deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment.
If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and indefinitelived
intangible assets are tested annually. An impairment loss is recognised if the carrying amount of a cash-
The Management Board of the company Gorenje, d.d.
generating unit (CGU) exceeds its recoverable amount.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are
grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit, or CGU”).
Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which
goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects
the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business
combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying
amounts of the other assets in the CGU on a pro rata basis.
The Management Board of the company Gorenje, d.d. 185