LensCrafters 2015 Annual Report Download - page 104

Notes to the consolidated financial statement as of December 31, 2015 Page 10 di 68
value of a recognized asset or liability (“hedged item”), both the changes in fair value of the derivative instrument as
well as changes in the hedged item are recorded in the consolidated statement of income. The gain or loss related to the
ineffective portion of the derivative instrument is recognized as financial income/expense.
1 Cash flow hedge—when a derivative financial instrument is designated as a hedge of the exposure to variability in
future cash flows of recognized assets or liabilities or highly probable forecasted transactions (“cash flow hedge”), the
effective portion of any gain or loss on the derivative financial instrument is recognized directly in other
comprehensive income (“OCI”). The cumulative gain or loss is removed from OCI and recognized in the consolidated
statement of income at the same time as the economic effect arising from the hedged item affects income. The gain or
loss related to the ineffective portion of the derivative instrument is recognized in the consolidated statement of
income. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the consolidated statement of income. When a hedge no longer meets the criteria
for hedge accounting, any cumulative gain or loss existing in OCI at that time remains in equity, and is recognized
when the economic effect arising from the hedged item affects income. The Group utilizes derivative financial
instruments, primarily Interest Rate Swap and Currency Swap contracts, as part of its risk management policy in order
to reduce its exposure to interest rate and exchange rate fluctuations. Despite the fact that certain currency swap
contracts are used as an economic hedge of the exchange rate risk, these instruments do not fully meet the criteria for
hedge accounting pursuant to IAS 39 and are marked to market at the end of each reporting period, with changes in fair
value recognized in the consolidated statement of income.
Accounts payable and other payables
Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less from the reporting date.
If not, they are presented as non-current liabilities.
Accounts payable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest
method.
Short and long-term debt
Short and long-term debt is initially recorded at fair value, less directly attributable transaction costs, and subsequently
measured at its amortized cost by applying the effective interest method. If there is a change in expected cash flows, the
carrying amount of the long term debt is recalculated by computing the present value of estimated future cash flows at the
financial instrument’s original effective interest rate. Long-term debt is classified under non-current liabilities when the Group
retains the unconditional right to defer the payment for at least 12 months after the balance sheet date and under current
liabilities when payment is due within 12 months from the balance sheet date. Short-term debt and cash are offset when the
Group has a legal right to set off the recognized amounts and intends to do so.
Short- and long-term debt is removed from the statement of financial position when it is extinguished, i.e. when the obligation
specified in the contract is discharged, canceled or expires.