2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

Notes
mulated translation differences in the shareholders’
equity.
In the individual financial statements of the Group
companies, income and expenses denominated in foreign
currencies are translated at the rate of exchange
on the date of the respective transaction. Assets and
liabilities are translated at the closing exchange rate
on the balance sheet date. The resulting gains and
losses on monetary assets and liabilities are recognized
in the income statement as currency gains/
losses. Unrealized exchange differences on nonmonetary
financial assets (investments in equity
instruments) are a component of the change in their
entire fair value. For non-monetary assets classified
as held for trading, unrealized exchange differences
are recognized in the income statement. For nonmonetary
financial investments classified as available
for sale, unrealized exchange differences are
recorded directly in shareholders’ equity until the
asset is sold.
Based on the revised provisions of IAS 21, the
reporting currency of several Group companies was
changed from the Swiss franc to the respective
functional currency. The effect of this change is not
material.
Consolidation period
The period covered by the consolidation is the calendar
year for all participations.
Accounting policies and valuation principles
The drawing up of the balance sheet and valuation of
all Group companies is performed in accordance with
uniform guidelines. These guidelines remain the same
as in the previous year.
Reporting of transactions
All completed transactions are reported and valued.
Foreign exchange and money market transactions are
posted to the balance sheet on the value date. Until
70 JULIUS BAER GROUP
the value date, they are stated in the off-balancesheet
transactions. Spot transactions in securities
and securities underwriting transactions are posted
to the balance sheet on the contract date in the
Group. According to IAS 39, all financial instruments
shall be assigned to one of the four categories
(“loans and receivables,” “held-to-maturity investments,”
“financial assets and financial liabilities at
fair value through profit or loss,” and “available-forsale
financial assets”) and uniformly recognized
within these categories on the settlement date or the
trade date. The divergent recognition of securities
transactions, cash transactions and securities underwriting
transactions within the four categories mentioned
above does not have a significant effect on the
balance sheet reporting.
Income from services is recorded at the time the
service is performed, i.e. upon execution of a transaction
or in the corresponding periods over the life of a
contract.
Income and income components that are based on
performance are recorded at the time in which all
performance criteria are fulfilled.
Money market instruments on the assets side and on the
liabilities side
Claims and liabilities are valued at their amortized
cost using the effective interest rate method.
Due from banks and customers, mortgages
Amounts due from banks and customers as well as
mortgages are initially recognized at fair value.
Impaired claims, i.e. claims for which it is unlikely
that the counterparty will be able to fulfill its future
obligations, are valued on an individual basis, and
specific valuation adjustments are established for
impaired amounts. Off-balance-sheet transactions,
such as firm commitments, guarantees or derivative
financial instruments, are also evaluated. Impaired
claims are classified as non-performing no later than