If the recoverable amount of an asset is estimated to be lower than its book value, the latter is reduced to the recoverable amount by recognising the corresponding write-
off using the consolidated comprehensive profit and loss statement.
If an impairment loss is subsequently reversed, the book value of the asset is increased to the limit of the original value at which such asset was booked before the loss of
value was recognised.
Information on impairment losses detected in the financial year appears in Notes 7 and 8 of this Consolidated Annual Report.
4.6
Leases
The Group generally classifies all leases as operating leases. Only those leases which substantially transfer to the lessee the liabilities and advantages arising from the
property and under the terms of which the lessee holds an acquisition option on the asset at the end of the agreement under conditions that could be clearly deemed as
more advantageous than market conditions are classified as financial leases.
4.6.1
Operating leases
In operating lease transactions, ownership of the leased asset and substantially all the risks and advantages arising from the ownership of the asset remainwith the lessor.
When the Group acts as the lessor, it recognises the income from operating leases according to the straight-line method in keeping with the terms of the agreements
entered into. These assets are depreciated in accordance with the policies adopted for similar own use tangible assets. When the Group acts as the lessee, lease expenses
are charged to the consolidated comprehensive profit and loss statement on a straight-line basis.
4.6.2
Financial leases
The Group recognises financial leases as assets and liabilities in the consolidated balance sheet at the start of lease term at the market value of the leased asset or at the
actual value of the minimum lease instalments, should the latter be lower. The interest rate established in the agreement is used to calculate the actual value of the lease
instalments.
The cost of assets acquired through financial leasing agreements is booked in the consolidated balance sheet according to the nature of the asset described in the
agreement.
The financial expenses are distributed over the period of the lease in accordance with a financial criterion.
4.7
Financial instruments
4.7.1
Financial assets
Financial assets are recognised in the consolidated balance sheet when they are acquired and initially booked at their fair value. The financial assets held by Group
companies are classified as follows:
-
Marketable financial assets: These include any assets acquired by the companies with the aim of taking short-term advantage of any changes their prices may
undergo or any existing differences between their purchase and sale price. This item also includes any financial derivatives that are not considered accounting
hedges.
-
Financial assets at maturity: These are assets subject to a fixed or determinable redemption amount whichmature over time. The Group declares its intention and
its capacity to keep these in its power from the date of acquisition to their maturity date.
-
Outstanding loans and accounts receivable generated by the Company: These are financial assets generated by the companies in exchange for deliveries of cash or
the supply of goods or services.
Marketable financial assets are valued after their acquisition at fair value, and any changes are included in the net profit/loss for the financial year.
Fair value of a financial instrument on a given date is construed as the amount for which it could be bought or sold on that same date by two knowledgeable parties acting
freely and prudently under conditions of mutual independence.
Financial assets at maturity and accounts receivable issued by the Group are valued at their depreciated cost and any interest accrued is recognised in the consolidated
comprehensive profit and loss statement on the basis of their effective interest rate. Depreciated cost is construed as the initial cost minus any charges or depreciation of
the principal, taking into account any potential reductions arising from impairment or default.
As regards valuation corrections made to trade and other accounts receivable in particular, the criterion used by the Group to calculate the corresponding valuation
corrections, if any, generally consists of provisioning for any balances expired at more than 180 days.
4.7.2
Cash and cash equivalents
“
Cash and Cash Equivalents” in the consolidated statement of financial position includes cash, demand deposits and other short-term, highly liquid investments that can
be realised in cash quickly and are not subject to a risk of changes in value.
REPORT ONTHE CONSOLIDATED FINANCIAL STATEMENTS
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