Unilever 2011 Annual Report Download - page 93

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90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS UNILEVER GROUP continued
15. Financial assets and liabilities
15A. Financial assets
Cash and cash equivalents
Cash and cash equivalents in the balance sheet include deposits, investments in money market funds and highly liquid
investments. To be classified as cash and cash equivalents, an asset must:
• be readily convertible into cash; and
• have an insignificant risk of changes in value; and
• have a maturity period of three months or less at acquisition.
Cash and cash equivalents in the cash flow statement also includes bank overdrafts.
Other financial assets
Other financial assets are first recognised on the trade date. At that point they are classified as:
(i) Loans and receivables;
(ii) Available-for-sale financial assets; or
(iii) Financial assets at fair value through profit or loss.
(i) Loans and receivables
These are assets with an established payment profile and which are not listed on a recognised stock exchange. They are initially
recognised at fair value, which is usually the original invoice amount plus any directly related transaction costs. Afterwards loans
and receivables are carried at amortised cost, less any impairment.
(ii) Available-for-sale financial assets
Any financial assets not classified as either loans and receivables or financial assets at fair value through profit or loss are
designated as available-for-sale. They are initially recognised at fair value, usually the original invoice amount plus any directly
related transaction costs. Afterwards they are measured at fair value with changes being recognised in equity. When the
investment is sold or impaired, the accumulated gains and losses are moved from equity to the income statement. Interest and
dividends from these assets are recognised in the income statement.
(iii) Financial assets at fair value through profit or loss
These are derivatives and assets that are held for trading. Related transaction costs are expensed as incurred. Unless they form
part of a hedging relationship (see note 16C on pages 97 to 98), these assets are held at fair value, with changes being recognised in
the income statement.
Impairment of financial assets
Each year the Group assesses whether there is evidence that financial assets are impaired. A significant or prolonged fall in value
below the cost of an asset generally indicates that an asset may be impaired. If impaired, financial assets are written down to their
estimated recoverable amount. Impairment losses on assets classified as loans and receivables are recognised in profit and loss.
When a later event causes the impairment losses to decrease, the reduction in impairment loss is also recognised in profit and
loss. Impairment losses on assets classified as available-for-sale are recognised by moving the loss accumulated in equity to the
income statement. Any subsequent recovery in value of an available-for-sale debt security is recognised within profit and loss.
However, any subsequent recovery in value of an equity security is recognised within equity.
Unilever Annual Report and Accounts 2011
Financial statements