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099098
2014 Samsung Electronics Annual Report2014 Samsung Electronics Annual Report
(5) Sensitivity analysis for recurring fair value measurements categorized within Level 3
Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of financial instruments which are affected by the unob-
servable parameters, using a statistical technique. When the fair value is affected by more than two input parameters, the amounts represent the most favorable or most unfa-
vorable.
The results of the sensitivity analysis for the effect on profit or loss (before-tax amount for other comprehensive income or loss) from changes in inputs for each financial instru-
ment which is categorized within Level 3 and subject to sensitivity analysis, are as follows: (In mil
lions of Korean won)
Classification Favorable Changes Unfavorable Changes
Profit or Loss Equity Profit or Loss Equity
Long-term available-for-sale financial assets1₩- ₩231,909 ₩- ₩(225,568)
Embedded derivatives
(convertible bonds)2
466 466 (475) (475)
Total ₩466 ₩232,375 ₩(475)₩(226,043)
1 Changes in fair value are calculated by increasing or decreasing the correlation between volatility (30.5% to 36.5%) and discount rate for convertible preferred stock. Similarly, for other equity
securities, changes in fair value are calculated with the correlation between growth ratio (-1% to 1%) and discount rate, which are significant unobservable inputs.
2 For equity derivatives, changes in their fair value are calculated by increasing or decreasing the correlation between stock prices and volatility by 10%.
(6) Fair value hierarchy classifications of the financial assets and financial liabilities that are measured at fair value as at December 31, 2014 and 2013, are as follows:
(In millions of Korean won)
Classification Carrying amount 2014
Level 1 Level 2 Level 3 Total
Assets
Other ₩4,614,560 ₩- ₩4,576,852 ₩- ₩4,576,852
Liabilities
Debentures 1,355,882 - 1,377,113 - 1,377,113
Long-term borrowings 101,671 - 82,271 - 82,271
Long-term other payables 2,520,277 - 2,606,179 - 2,606,179
(In millions of Korean won)
Classification Carrying amount 2013
Level 1 Level 2 Level 3 Total
Assets
Other ₩5,432,404 ₩-₩5,395,918 ₩-₩5,395,918
Liabilities
Debentures 1,311,068 -1,327,569 -1,327,569
Long-term borrowings 985,117 -971,844 -971,844
Long-term other payables 1,023,714 -1,090,580 -1,090,580
As at December 31, 2014, assets and liabilities not measured at fair value but for which the fair value is disclosed and categorized within Level 2 in the fair value hierarchy, are
measured using the present value technique which discounts future cash flows with appropriate interest rates.