Saab 2011 Annual Report Download - page 90

Upon initial classication as held for sale, assets are recognised at the lower of
their carrying amount and fair value less selling expenses.
Assets are not depreciated/amortised aer they are classied as held for sale.
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 annually in the fourth quarter.
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 amortisa-
tion 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 certain accrued expenses and other liabilities. Financial assets
are recognised as of their settlement date.
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 or
unlisted holdings. ese valuation methods are based on the valuation of
similar instruments, discounted cash ows or accepted valuation models
such as Black-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 indica-
tions that a nancial asset or pool of nancial assets is in need of impairment.
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 classied in one of the following categories:
t 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.
t Held-to-maturity investments:
Financial assets in this category relate to non-derivative assets with pre-
determined or determinable payments and scheduled maturities that
the company intends and has the ability to hold to maturity. ey are val-
ued at amortised cost.
t 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 ser-
vices 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 re-
ceived based on an individual valuation. Accounts receivable have a
short maturity, due to which they are recognised at their nominal
amount without discounting. Impairment losses on accounts receiva-
ble are recognised in operating expenses. Saab has an accounts receiv-
able sales programme with an independent party. When a receivable
is sold, the entire credit risk is transferred to the counterparty, because
of which the proceeds received are recognised as liquid assets.
Other receivables are receivables that arise when the company pro-
vides money without the intent to trade its claim.
t Other nancial liabilities:
Liabilities classied as other nancial liabilities are initially recog-
nised 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 li-
abilities. 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 INFORMATION > NOTES
86 SAAB ANNUAL REPORT 2011