LensCrafters 2015 Annual Report Download - page 103

Notes to the consolidated financial statement as of December 31, 2015 Page 9 di 68
is established.
A regular way purchase or sale of financial assets is recognized using the settlement date.
Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership.
The fair value of listed financial instruments is based on the quoted price on an active market. If the market for a financial asset
is not active (or if it refers to non-listed securities), the Group defines the fair value by utilizing valuation techniques. These
techniques include using recent arms-length market transactions between knowledgeable willing parties, if available, reference
to the current fair value of another instrument that is substantially the same, discounted cash flows analysis, and pricing models
based on observable market inputs, which are consistent with the instruments under valuation.
The valuation techniques are primarily based on observable market data as opposed to internal sources of information.
At each reporting date, the Group assesses whether there is objective evidence that a financial asset is impaired. In the case of
investments classified as financial assets held for sale, a prolonged or significant decline in the fair value of the investment
below its cost is also considered an indicator that the asset is impaired. If any such evidence exists for an available-for-sale
financial asset, the cumulative loss, measured as the difference between the cost of acquisition and the current fair value, net
any impairment loss previously recognized in the consolidated statement of income, is removed from equity and recognized in
the consolidated statement of income.
Any impairment loss recognized on an investment classified as an available-for-sale financial asset is not reversed.
Derivative financial instruments
Derivative financial instruments are accounted for in accordance with IAS 39—Financial Instruments: Recognition and
Measurement.
At the date the derivative contract is entered into, derivative instruments are accounted for at their fair value and, if they are not
designated as hedging instruments, any changes in fair value after initial recognition are recognized as components of net
income for the year. If, on the other hand, derivative instruments meet the requirements for being classified as hedging
instruments, any subsequent changes in fair value are recognized according to the following criteria, as illustrated below.
The Group designates certain derivatives as instruments for hedging specific risks associated with highly probable transactions
(cash flow hedges).
For each derivative financial instrument designated as a hedging instrument, the Group documents the relationship between the
hedging instrument and the hedged item, as well as the risk management objectives, the hedging strategy and the methodology
to measure the hedging effectiveness. The hedging effectiveness of the instruments is assessed both at the hedge inception date
and on an ongoing basis. A hedging instrument is considered highly effective when both at the inception date and during the life
of the instrument, any changes in fair value of the derivative instrument offset the changes in fair value or cash flows
attributable to the hedged items.
If the derivative instruments are eligible for hedge accounting, the following accounting criteria are applicable:
1 Fair value hedge—when a derivative financial instrument is designated as a hedge of the exposure to changes in fair