ING Direct 2011 Annual Report Download - page 105

Furthermore, in addition to the restrictions in respect of minimum capital requirements that are imposed by industry regulators in the
countries in which the subsidiaries operate, other limitations exist in certain countries.
ING Group’s interests in jointly controlled entities are accounted for using proportionate consolidation. ING Group proportionately
consolidates its share of the joint ventures’ individual income and expenses, assets and liabilities, and cash flows on a line-by-line basis
with similar items in ING Group’s financial statements. ING Group recognises the portion of gains or losses on the sale of assets to the
joint venture that is attributable to the other venturers. ING Group does not recognise its share of profits or losses from the joint venture
that results from the purchase of assets by ING Group from the joint venture until it resells the assets to a third party. However, if a loss
onthe transaction provides evidence of a reduction in the net realisable value of current assets or an impairment loss, the loss is
recognised immediately.
Disposal groups held for sale and discontinued operations
Disposal groups held for sale are measured at the lower of their carrying amount or fair value less cost to sell. Disposal groups (and groups
of non-current assets) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather
than through continuing use. This is only the case when the sale is highly probable and the disposal group (or group of assets) is available
for immediate sale in its present condition; management must be committed to the sale, which is expected to occur within one year from
the date of classification as held for sale. When a group of assets that is classified as held for sale represents a major line of business or
geographical area the disposal group classifies as discontinued operations. In the consolidated profit and loss account, the income and
expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level
of result after tax for both the current and for comparative years.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of the consolidated financial statements necessitates the use of estimates and assumptions. These estimates and
assumptions affect the reported amounts of the assets and liabilities and the amounts of the contingent liabilities at the balance sheet
date, as well as reported income and expenses for the year. The actual outcome may differ from these estimates.
The process of setting assumptions is subject to internal control procedures and approvals, and takes into account internal and external
studies, industry statistics, environmental factors and trends, and regulatory requirements.
SEGMENT REPORTING
An operating segment is a distinguishable component of the Group, engaged in providing products or services, subject to risks and returns
that are different from those of other operating segments. A geographical area is a distinguishable component of the Group engaged in
providing products or services within a particular economic environment that is subject to risks and returns that are different from those
ofsegments operating in other economic environments. The geographical analyses are based on the location of the office from which the
transactions are originated.
ANALYSIS OF INSURANCE BUSINESS
Where amounts in respect of insurance business are analysed into ‘life’ and ‘non-life’, health and disability insurance business which is
similar in nature to life insurance business is included in ‘life’.
FOREIGN CURRENCY TRANSLATION
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in euros, which
isING Group’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transactions.
Exchange rate differences resulting from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account, except when deferred in
equity as part of qualifying cash flow hedges or qualifying net investment hedges.
Exchange rate differences on non-monetary items, measured at fair value through profit and loss, are reported as part of the fair value
gain or loss. Non-monetary items are retranslated at the date fair value is determined. Exchange rate differences on non-monetary items
measured at fair value through the revaluation reserve are included in the revaluation reserve in equity.
Exchange rate differences in the profit and loss account are generally included in Net trading income. Reference is made to Note 41 ‘Net
trading income’, which discloses the amounts included in the profit and loss account. Exchange rate differences relating to the disposal of
available-for-sale debt and equity securities are considered to be an inherent part of the capital gains and losses recognised in Investment
income. As mentioned below in Group companies relating to the disposals of group companies, any exchange rate difference deferred in
equity is recognised in the profit and loss account in Net result on disposals of group companies. Reference is also made to Note 13
‘Shareholders’ equity (parent)/non-voting equity securities’, which discloses the amounts included in the profit and loss account.
Accounting policies for the consolidated annual accounts of ING Group continued
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
103ING Group Annual Report 2011