ING Direct 2015 Annual Report Download - page 49

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
Other intangible assets
Other intangible assets are capitalised and amortised over their expected economic life, which is generally between three and ten
years. Intangible assets with an indefinite life are not amortised.
Taxation
Income tax on the result for the year comprises current and deferred tax. Income tax is recognised in the profit and loss account but it
is recognised directly in equity if the tax relates to items that are recognised directly in equity.
Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets and liabilities are not
discounted.
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary
differences can be utilised. Deferred income tax is provided on temporary differences arising from investments in subsidiaries and
associates, except where the timing of the reversal of the temporary difference is controlled by ING Bank and it is probable that the
difference will not reverse in the foreseeable future. The tax effects of income tax losses available for carry forward are recognised as
an asset where it is probable that future taxable profits will be available against which these losses can be utilised.
Deferred tax related to fair value remeasurement of available-for-sale investments and cash flow hedges, which are recognised
directly in equity, is also recognised directly in equity and is subsequently recognised in the profit and loss account together with the
deferred gain or loss.
Uncertain tax positions are assessed continually by ING Bank and in case it is probable that there will be a cash outflow; a current tax
liability is recognised.
Financial liabilities
Financial liabilities at amortised cost
Financial liabilities at amortised cost include the following sub-categories: preference shares, other borrowed funds, debt securities in
issue, subordinated loans, amounts due to banks and customer deposits and other funds on deposit.
Preference shares, which carry a mandatory coupon or are redeemable on a specific date or at the option of the shareholder, are
classified as financial liabilities. The dividends on these preference shares are recognised in the profit and loss account as Interest
expense using the effective interest method.
Borrowings are recognised initially at their issue proceeds (fair value of consideration received) net of transaction costs incurred.
Borrowings are subsequently stated at amortised cost; any difference between proceeds, net of transaction costs, and the redemption
value is recognised in the profit and loss account over the period of the borrowings using the effective interest method.
If ING Bank purchases its own debt, it is removed from the balance sheet, and the difference between the carrying amount of the
liability and the consideration paid is included in the profit and loss account.
Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss comprise the following sub-categories: trading liabilities, non-trading derivatives
and other financial liabilities designated at fair value through profit and loss by management. Trading liabilities include equity
securities, debt securities, funds on deposit and derivatives. Designation by management will take place only if it eliminates a
measurement inconsistency or if the related assets and liabilities are managed on a fair value basis. ING Bank has designated an
insignificant part of the issued debt, related to market-making activities, at fair value through profit and loss. This issued debt consists
mainly of own bonds. The designation as fair value through profit and loss eliminates the inconsistency in the timing of the
recognition of gains and losses. All other financial liabilities are measured at amortised cost.
Financial guarantee contracts
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial
guarantees are initially recognised at fair value and subsequently measured at the higher of the discounted best estimate of the
obligation under the guarantee and the amount initially recognised less cumulative amortisation to reflect revenue recognition
principles.
ING Bank Annual Report 2015 47