Saab 2010 Annual Report Download - page 80

Impairment
e carrying amount of xed assets, with the exception of assets stated at fair
value, is tested on each closing day for any indication of impairment. If an
indication exists, the asset’s recoverable amount is calculated. A description of
impairment principles for available-for-sale nancial assets is provided below.
For goodwill and other intangible xed assets with an indeterminate
period of use and intangible xed assets not yet ready for use, recoverable val-
ues are calculated at least annually.
e recoverable amount of an asset is the higher of its fair value less sell-
ing expenses and value in use. Value in use is measured by discounting future
cash ows using a discounting factor that takes into account the risk-free rate
of interest plus supplemental interest corresponding to the risk associated
with the specic asset.
If essentially independent cash ows cannot be isolated for individual
assets, the assets are grouped at the lowest levels where essentially independ-
ent cash ows can be identied (cash-generating units). An impairment loss
is recognised when the carrying amount of an asset or cash-generating unit
exceeds its recoverable value. Impairment losses are charged against the
income statement.
Impairment losses attributable to a cash-generating unit (pool of units)
are mainly allocated to goodwill, aer which they are divided proportionately
among other assets in the unit (pool of units).
Impairment of goodwill is not reversed.
Impairment losses from other assets are reversed if a change has occurred
in the assumptions that served as the basis for determining recoverable value.
Impairment is reversed only to the extent the carrying amount of the assets
following the reversal does not exceed the carrying amount that the asset
would have had if the impairment had not been recognised, taking into
account the depreciation or amortisation that would have been recognised.
Financial assets and liabilities and other financial instruments
Financial instruments recognised in the statement of nancial position
include, on the asset side, liquid assets, accounts receivable, shares, loans
receivable, bonds receivable, derivatives and part of accrued income and
other receivables. Liabilities include trade accounts payable, loans payable,
derivatives and part of accrued expenses and other liabilities.
Financial instruments are initially recognised at cost, corresponding to
the instrument’s fair value plus transaction expenses for all nancial instru-
ments with the exception of those in the category nancial assets at fair value
through prot or loss. e instruments are subsequently recognised at fair
value or amortised cost, depending on how they have been classied as fol-
lows. e fair value of listed nancial assets and liabilities is determined using
market prices. Saab also applies various valuation methods to determine the
fair value of nancial assets and liabilities traded on an inactive market. ese
valuation methods are based on the valuation of similar instruments, dis-
counted cash ows or accepted valuation models such as Black and Scholes.
Amortised cost is determined based on the eective interest rate calculated
on the acquisition date.
A nancial asset or nancial liability is recognised in the statement of
nancial position when the company becomes party to the instrument’s con-
tractual terms. Accounts receivable are recognised in the statement of nan-
cial position when an invoice has been sent. Liabilities are recognised when
the counterparty has performed and there is a contractual obligation to pay,
even if an invoice has not yet been received. Accounts payable are recognised
when an invoice is received.
A nancial asset is removed from the statement of nancial position
when the rights in the agreement are realised, expire or the company loses
control over them. e same applies to part of a nancial asset. A nancial
liability is removed from the statement of nancial position when the obliga-
tion in the agreement has been discharged or otherwise extinguished. e
same applies to part of a nancial liability.
On each reporting date, Saab evaluates whether there are objective indi-
cations that a nancial asset or pool of nancial assets is in need of impair-
ment. Financial assets and liabilities are oset and recognised as a net amount
in the statement of nancial position when the there is a legal right to a set-o
and when the intent is to settle the items with a net amount or to realise the
asset and settle the liability at the same time.
Financial assets and liabilities are classified in one of the following
categories:
Financial assets and liabilities at fair value through prot or loss
Assets and liabilities in this category are carried at fair value with changes in
value recognised in prot or loss. is category consists of two subgroups:
nancial assets and liabilities held for trading and other nancial assets and
liabilities that the company initially chose to recognise at fair value through
prot or loss. A nancial asset is classied as held for trading if it is acquired
for the purpose of selling in the near term. Derivatives are always recognised
at fair value through prot or loss, unless hedge accounting is applied.
Held-to-maturity investments
Financial assets in this category relate to non-derivative assets with predeter-
mined or determinable payments and scheduled maturities that the company
intends and has the ability to hold to maturity. ey are valued at amortised cost.
Loans receivable and accounts receivable
Loans receivable and accounts receivable are non-derivative nancial assets
with xed payments which are not listed on an active market. Receivables
arise when the company provides money, goods or services directly to the
debtor without the intent to trade its claim. e category also includes
acquired receivables. Assets in this category are recognised aer acquisition
at amortised cost.
Accounts receivable are recognised at the amount expected to be received
based on an individual valuation. Accounts receivable have a short maturity,
due to which they are recognised at their nominal amount without discount-
ing. Impairment losses on accounts receivable are recognised in operating
expenses.
Other receivables are receivables that arise when the company provides
money without the intent to trade its claim.
Other nancial liabilities
Liabilities classied as other nancial liabilities are initially recognised at the
amount received aer deducting transaction expenses. Aer acquisition, the
loans are carried at amortised cost, according to the eective rate method.
Trade accounts payable are classied in the category other nancial liabil-
ities. Trade accounts payable have a short expected maturity and are carried
without discounting at their nominal amount.
Calculation of recoverable value
e recoverable value of nancial assets in the categories held-to-maturity
investments, loans receivable and accounts receivable measured at amortised
cost is calculated using the present value of future cash ows discounted by
the eective interest rate in eect when the asset was initially recognised.
Assets with a maturity of less than one year are not discounted.
Impairment of held-to-maturity investments and loans receivable and
accounts receivable recognised at amortised cost is reversed if a subsequent
increase in recoverable value can objectively be attributed to an event occur-
ring aer the impairment
Liquid assets
Liquid assets consist of cash and cash equivalents, immediately accessible
balances with banks and similar institutions, and short-term liquid invest-
ments with a maturity from acquisition date of less than three months, which
are exposed to no more than an insignicant risk of uctuation in value.
Financial investments
Financial investments comprise either nancial xed assets or short-term
investments, depending on the intent of the holding. If the maturity or the
anticipated holding period is longer than one year, they are considered nan-
cial xed assets, and if it is shorter than one year they are short-term invest-
ments.
With recognition at fair value through prot or loss, changes in value are
stated in nancial revenue and expenses.
FINANCIAL INFORMATION > NOTES
SAAB ANNUAL REPORT 2010 77