Page 22 - KELAG Annual Report 2017
P. 22

Investments in associates and joint ventures, which are accounted for in accordance with IAS 28,
           are precluded from the scope of application of IFRS 9. IASB clarifies that IFRS 9 only applies to
           investments in associates and joint ventures if the equity method is applied, otherwise these
           investments are measured pursuant to IFRS 9. This amendment to IAS 28 will have an effect in the
           Group to the extent that associates not accounted for using the equity method fall within the
           scope of application of IFRS 9.

           The Group classifies its assets and liabilities in the statement of financial position into current and
           non-current items.

           The  rolling  once-yearly  settlement  of  end  customer  transactions  should  be  regarded  as  an
           indication for determining the business cycle in accordance with IAS 1.68. The KELAG Group’s
           normal business cycle is therefore 12 months and thus defines the classification of current and
           non-current assets and liabilities.

           Deferred tax assets and liabilities are not classified as current assets or liabilities.

           Business combinations are accounted for by comparing the consideration paid (plus any non-
           controlling  interest)  with  the  fair  value  of  the  net  assets  acquired  to  determine  a  potential
           difference from the business combination.

           If  the  difference  is  negative,  the  calculation  of  consideration  paid  and  the  purchase  price
           allocation must be reassessed. If the difference is still negative  after the reassessment, this is
           recognised in the income statement.

           Any  positive  difference  is  recognised  as  goodwill.  The  goodwill  is  allocated  to  those  cash-
           generating  units  that  are  expected  to  benefit  from  the  synergies  resulting  from  a  business
           combination. These cash-generating units correspond to the lowest level at which management
           monitors the goodwill for internal management purposes.

           In the KELAG Group, the annual impairment test of goodwill at the level of the cash-generating
           units takes place in the fourth quarter of the reporting period based on the mid-range planning,
           unless an indication for impairment has been identified at an earlier point in time. In addition to
           the  annual  impairment  testing,  the  Group  performs  a  quality-focused  analysis  to  identify
           indications of impairment as of the date of the interim half-yearly financial statements. If any
           indications of impairment are identified, the Group performs an (additional) impairment test.

           The KELAG Group defines its cash-generating units based on the fact that the cash inflows of the
           corresponding asset are largely independent.
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