IMMOEAST Annual Report 2006/07

lessee’s interest in both land and buildings is classified as investment property in accordance with IAS 40 and the
fair value model is used for recognition and measurement.
3.10 Financial instruments
A financial instrument is defined as a contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of an other entity. This definition covers securities, receivables, liabilities, equity and derivatives.
The commentaries to the tables under point 4.5 present the information on financial instruments by class as required
by IFRS 7.6 as well as the transition calculation to the positions shown on the balance sheet.
3.10.1 Investments in other companies
Additional information on investments in other companies is provided under point 4.5.
Investments in other companies are stated at fair value in accordance with IAS 39. If this amount cannot be determined
reliably, such investments are reported at cost less any impairment losses.
Loans granted are generally recorded at cost or the lower present value as of the balance sheet date.
Securities reported under non-current assets and investments in other companies are classified as available-for-sale
in keeping with IAS 39, and recorded at their fair value or market value as of the balance sheet date. If fair value cannot
be determined and comparable market prices are not available, fair value is established using generally accepted
valuation methods (discounted cash flow method) or, in the case of property companies, according to the net asset
value. The initial valuation is made as of the settlement date. Fluctuations in fair value are charged or credited directly
to equity; these changes are only recognised to the income statement in the event of impairment or when the securities
are sold. If there are objective indications of impairment to an asset, an appropriate write-down is made.
Upon initial recognition, an entity may elect to recognise a financial instrument at fair value through profit or loss in
accordance with IAS 39.9. This classification is only permitted when:
• it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from
measuring assets, or
• the financial instrument is part of a portfolios whose performance is measured on a fair value basis and information
is reported internally on this basis to the entity’s key management personnel as defined in IAS 24.
In addition, IAS 39.11A permits the measurement of certain hybrid financial instruments in their entirety at fair value.
Financial instruments acquired after 1 May 2004 are generally designated as financial assets at fair value through
profit or loss in accordance with IAS 39 (see point 4.5), and are measured at fair value as of the balance sheet date.
Changes in fair value are recognised to the income statement.
3.10.2 Receivables and other assets
Receivables and other assets are stated at cost. Recognisable individual risks are reflected in appropriate valuation
adjustments.
Notes
Report by the Executive Board 179
Highlights 2006/07
Business Model and Strategy
Portfolio Structure
Corporate Governance and Outlook
Property Portfolio
Development of Business
Consolidated Financial Statements
Service and Glossary
IAS 32.11
IAS 39.43
IAS 39.9
IAS 39.11A
IAS 39.43