ING Direct 2015 Annual Report Download - page 48

Contents
Who we are
Report of the
Management
Board
Corporate
Governance
Consolidated
annual accounts
Parent company
annual accounts
Other
information
Additional
information
Notes to the Consolidated annual accounts of ING Bank - continued
ING Bank as the lessee
The leases entered into by ING Bank are primarily operating leases. The total payments made under operating leases are recognised
in the profit and loss account on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any penalty payment to be made to the lessor is
recognised as an expense in the period in which termination takes place.
ING Bank as the lessor
When assets are held subject to a finance lease, the present value of the lease payments is recognised as a receivable under Loans
and advances to customers or Amounts due from banks. The difference between the gross receivable and the present value of the
receivable is unearned lease finance income. Lease income is recognised over the term of the lease using the net investment method
(before tax), which reflects a constant periodic rate of return. When assets are held subject to an operating lease, the assets are
included under Assets under operating leases.
Acquisitions, goodwill and other intangible assets
Acquisitions and goodwill
ING Bank’s acquisitions are accounted for using the acquisition method of accounting. The consideration for each acquisition is
measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity
instruments issued in exchange for control of the acquiree. Goodwill, being the difference between the cost of the acquisition
(including assumed debt) and the Bank’s interest in the fair value of the acquired assets, liabilities and contingent liabilities as at the
date of acquisition, is capitalised as an intangible asset. The results of the operations of the acquired companies are included in the
profit and loss account from the date control is obtained.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value. Subsequent changes in the fair value of contingent consideration classified
as an asset or liability are accounted for in accordance with relevant IFRSs, taking into account the initial accounting period below.
Changes in the fair value of the contingent consideration classified as equity, are not recognised.
Where a business combination is achieved in stages, ING Bank’s previously held interests in the assets and liabilities of the acquired
entity are remeasured to fair value at the acquisition date (i.e. the date ING Bank obtains control) and the resulting gain or loss, if any,
is recognised in the profit and loss account. Amounts arising from interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are reclassified to the profit and loss account, where such treatment
would be appropriate if that interest were disposed of. Acquisition-related costs are recognised in the profit and loss account as
incurred and presented in the profit and loss account as Other operating expenses.
Until 2009, before IFRS 3 ‘Business Combinations’ was revised, the accounting of previously held interests in the assets and liabilities of
the acquired entity were not remeasured at the acquisition date and the acquisition-related costs were considered to be part of the
total consideration.
The initial accounting for the fair value of the net assets of the companies acquired during the year may be determined only
provisionally as the determination of the fair value can be complex and the time between the acquisition and the preparation of the
Annual Accounts can be limited. The initial accounting shall be completed within a year after acquisition.
Goodwill is only capitalised on acquisitions. Goodwill is allocated to reporting units for the purpose of impairment testing. These
reporting units represent the lowest level at which goodwill is monitored for internal management purposes. This test is performed
annually or more frequently if there are indicators of impairment. Under the impairment tests, the carrying value of the reporting
units (including goodwill) is compared to its recoverable amount which is the higher of its fair value less costs to sell and its value in
use.
Adjustments to the fair value as at the date of acquisition of acquired assets and liabilities, that are identified within one year after
acquisition are recognised as an adjustment to goodwill; any subsequent adjustment is recognised as income or expense. On disposal
of group companies, the difference between the sale proceeds and carrying value (including goodwill) and the unrealised results
(including the currency translation reserve in equity) is included in the profit and loss account.
Computer software
Computer software that has been purchased or generated internally for own use is stated at cost less amortisation and any
impairment losses. Amortisation is calculated on a straight-line basis over its useful life. This period will generally not exceed three
years. Amortisation is included in Other operating expenses.
ING Bank Annual Report 2015 46