Page 103 - KELAG Annual Report 2019
P. 103

An impairment loss is generally assessed at the level of the cash-generating units (CGU). The
           KELAG Group defines its cash-generating units based on the fact that the cash inflows of the
           corresponding asset are largely independent.

           An impairment loss is recognised if the carrying amount exceeds the recoverable amount of the
           asset or a cash-generating unit. The recoverable amount is the higher of an asset’s value in use or
           fair value less costs to sell. As a rule, fair value less costs to sell is calculated using a market-based
           approach or income-based approach depending on the availability of inputs observable on the
           market. For instance, a market-based approach applies to existing binding purchase offers that
           rely on pricing on active markets or recent benchmark transactions within the sector. The income-
           based approach uses the discounted cash flow (DCF) method. If the reasons for impairment no
           longer  apply  in  subsequent  periods,  impairment  losses  are  reversed  (except  in  the  case  of
           goodwill).

           The discount rate is a post-tax rate that reflects the current market assessment and the specific
           risks  relating  to  the  asset  (or  cash-generating  unit).  The  relevant  pre-tax  rate  is  calculated
           iteratively.

           The carrying amounts of investments accounted for using the equity method are subsequently
           adjusted for the change in the Group’s share of the investee’s net assets in accordance with IAS 28.
           Investments accounted for using the equity method are tested for evidence of impairment on the
           respective reporting date if any impairment indicators are present and subject to impairment
           tests pursuant to IAS 36 if necessary. Fair value of an investment is calculated according to the fair
           value hierarchy in IFRS 13; it is the market-based or income-based measurement method that is
           applied depending on the availability of inputs observable on the market. the best available
           information that a hypothetical purchaser would rely on in an arm’s length transaction. Value in
           use is calculated using the proportional present value of the estimated future cash flow to be
           recorded by the investee.

           Securities  and  book-entry  securities  presented  in  the  statement  of  financial  position  mainly
           comprise  Austrian  government  bonds,  which  fulfil  the  coverage  requirement  of  Sec. 14  EStG
           (Austrian Income Tax Act) for pension provisions. These are carried at amortised cost because the
           payments exclusively comprise interest and principal payments and they are held to collect the
           contractual cash flows. These securities are measured using the effective interest method in the
           consolidated financial statements of the KELAG Group with reference to IFRS 9. Acquisitions and
           sales are recognised at their value on the settlement date. Impairment losses are recognised
           through profit or loss, if applicable. Interest income calculated using the effective interest method
           is recognised in the financial result in the income statement.
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