GENERAL MEETING DRAFT - Bankier.pl

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>> Financial Statements
Part A – Accounting Policies
If it is necessary to separate an embedded derivative from its host contract, but it is not possible to
measure the embedded derivative separately either at acquisition or at a subsequent financial reporting
date, the entire combined contract is treated as a financial asset or financial liability at fair value through
profit or loss.
When an embedded derivative is separated, the host contract is recognised according to its category.
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Available-for-sale financial assets are those non-derivative financial assets that are designated as
available for sale or are not classified as loans and receivables, held-to-maturity investments, financial
assets held for trading or financial assets at fair value through profit or loss. These assets are held for an
indefinite period of time and for the purpose of ensuring liquidity and responding to changes in interest
rates, exchange rates and prices.
AfS financial assets are money market instruments, other debt instruments or equity instruments.
On initial recognition, an AfS financial asset is measured at fair value plus transaction costs and income
directly attributable to the instrument, less fees and commissions.
Interest on interest-bearing instruments is recognised at amortised cost using the effective interest rate
method.
In subsequent periods available-for-sale financial assets are measured at fair value, the interest at
amortized cost being recognized in the income statement. Gains or losses arising out of changes in fair
value are recognised in equity item 140 “Revaluation reserves” – except losses due to impairment and
exchange rate gains or losses on monetary items (debt instruments) which are recognised under item
130.b) “Impairment losses on AfS available for sale financial assets” and item 80 “Gains (losses) on
financial assets and liabilities held for trading” respectively - until the financial asset is sold, at which time
cumulative gains and losses are recognised in profit or loss in item 100(b) “Gains (losses) on disposal or
repurchase of AfS financial assets”.
The fair value changes recorded in item 140 "Revaluation reserves" are also reported in the Statement of
Comprehensive Income.
Equity instruments (shares) not listed in an active market and whose fair value cannot be reliably
determined are valued at cost.
If there is objective evidence of an impairment loss on an available-for-sale financial asset, the cumulative
loss that had been recognised directly in equity item 140 “Revaluation reserves”, is removed from equity
and recognised in profit or loss under item 130 b) “Impairment losses (b) Available for sale financial
assets”.
In respect of debt instruments, any circumstances indicating that the borrower is experiencing financial
difficulties which could prejudice the collection of the principal or interest, represent an impairment loss.
Lasting loss of value of equity instruments is assessed on the basis of indicators such as fair value below
cost and adverse changes in the environment in which the company operates, as well as the issuer’s debt
service difficulties.
If the fall in fair value below cost is more than 50% or lasts for more than 18 months, the loss of value is
considered lasting.