Nokia 2015 Annual Report Download - page 160

158 NOKIA IN 2015
Fair value hierarchy
Financial assets and liabilities recorded at fair value are categorized based on the amount of unobservable inputs used to measure their fair
value. Three hierarchical levels are based on an increasing amount of judgment associated with the inputs used to derive fair value for these
assets and liabilities, level 1 being market values and level 3 requiring most management judgment. At the end of each reporting period,
theGroup categorizes its nancial assets and liabilities to appropriate level of fair value hierarchy.
Items measured at fair value on a recurring basis at December 31:
EURm
Instruments with
quoted prices in
active markets
(level 1)
Valuation
technique using
observable data
(level 2)
Valuation
technique using
non-observable
data (level 3) Total
2015
Available-for-sale investments, publicly quoted equity shares 16 – – 16
Available-for-sale investments, carried at fair value 1 14 688 703
Other current nancial assets, derivatives(1) –96 –96
Investments at fair value through prot and loss, liquid assets 687 – – 687
Available-for-sale investments, liquid assets carried at fair value 2 156 11 – 2 167
Cash and cash equivalents carried at fair value 6 995 – – 6 995
Total assets 9 855 121 688 10 664
Other nancial liabilities, derivatives(1) –114 –114
Total liabilities –114 –114
2014
Available-for-sale investments, publicly quoted equity shares 14 – – 14
Available-for-sale investments, carried at fair value 1 13 556 570
Other current nancial assets, derivatives(1) –241 –241
Investments at fair value through prot and loss, liquid assets 418 – – 418
Available-for-sale investments, liquid assets carried at fair value 2 116 11 – 2 127
Cash and cash equivalents carried at fair value 5 170 – – 5 170
Total assets 7 719 265 556 8 540
Other nancial liabilities, derivatives(1) –174 –174
Total liabilities –174 –174
(1) Refer to Note 20, Derivative nancial instruments for the allocation between hedge accounted and non-hedge accounted derivatives.
The level 1 category includes nancial assets and liabilities that are measured in whole or in signicant part by reference to published quotes
inan active market. A nancial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market
transactions on an arm’s-length basis. This category includes listed bonds and other securities, listed shares and exchange-traded derivatives.
The level 2 category includes nancial assets and liabilities measured using a valuation technique based on assumptions that are supported
byprices from observable current market transactions. These include assets and liabilities for which pricing is obtained via pricing services,
butwhere prices have not been determined in an active market, nancial assets with fair values based on broker quotes and assets that
arevalued using the Group’s own valuation models whereby the material assumptions are market observable. The majority of the Group’s
over-the-counter derivatives and certain other instruments not traded in active markets are included within this category.
The level 3 category includes a large number of investments in unlisted equities and unlisted venture funds, including investments managed
byNokia Growth Partners specializing in growth-stage investing and by BlueRun Ventures focusing on early stage opportunities. The level 3 fair
value is determined using one or more valuation techniques where the use of the market approach generally consists of using comparable
market transactions, while the use of the income approach generally consists of calculating the net present value of expected future cash ows.
For unlisted funds, the selection of appropriate valuation techniques by the fund managing partner may be aected by the availability and
reliability of relevant inputs. In some cases, one valuation technique may provide the best indication of fair value while in other circumstances
multiple valuation techniques may be appropriate.
Notes to consolidated nancial statements continued