New Wave Group AB Annual_report_2018_EN_HQ | Page 74

NWG // FINANCIAL INFORMATION // THE GROUP Impairment If there are internal or external indica- tions of a decline in the value of an asset, the asset is to be tested for impairment. For assets with indefinite useful lives, goodwill and trademarks, such tests are performed at least once a year, whether there are any indications of impairment or not. An asset or group of assets, known as a cash-generating unit, should be written down if the recoverable amount is lower than the carrying amount. The recoverable amount is the higher of value in use and net realisable value. Impairment losses are recognised in the income statement in the period during which they occur. If an individual asset cannot be tested separately, as it is not possible to identify the fair value less selling expenses for the asset, the asset is allocated to a group of assets, known as a cash-generating unit, for which it is possible to identify separate future cash flows. To the extent that the underlying factors behind an impairment loss change in coming periods, the impairment loss will be reversed. Impairment of goodwill is never reversed. Information on the specific assumptions which need to be made to calculate value in use is provided in Note 8. Provisions A provision is recognised when the Group has a legal or constructive obli- gation arising from previous events and it is probable that an outgoing payment will be required to settle the obligation and the amount can be reliably measured. In cases where the Group expects that an obligation for which a provision has been recognised will be paid by an outside party, for instance under the terms of 074 // ANNUAL REPORT an insurance contract, a separate asset is recorded, but only when it is practically certain that the payment will be received. If the obligation for which a provision has been made is due to be settled after more than twelve months, the future payment should be discounted to present value using a discount rate which reflects short-term market expectations, taking account of transaction-specific risks. Financial instruments A financial asset is recognised when counterparty shall perform and there is a contractual right to receive payment, even if no invoice has been sent. A financial asset is removed from the balance sheet when the rights inherent in the agreement are realised or expire or if the Company loses control over them. The same applies to a portion of a financial asset. A financial liability is recognised when counterparty has performed and there is a contractual duty to pay, even if no invoice has been received. A financial liability is removed from the balance sheet when the obligation in the agre- ement is fulfilled or otherwise ceases to apply. The same applies to part of a financial liability. Financial instruments are initially classified as one of the following: # # financial instruments valued at amortised cost # # financial instruments valued at fair value through profit or loss, or # # financial instruments valued at fair value through other comprehensive income New Wave Group holds financial assets and liabilities in all three categories. Financial instruments valued at amortised cost Financial instruments are initially carried at fair value and thereafter at amortised cost. The Group’s financial assets valued at amortised cost are essentially accounts receivable, other receivables and liquid funds. Accounts receivable are reco- gnised in the balance sheet when an invoice has been sent. The expected maturity of accounts receivable is short, and the value is therefore reco- gnised at the nominal amount without discounting. Liquid funds comprise liquid bank deposits and available cash assets. Financial assets are valued at each closing day. For financial assets valued at amortised cost, the Group recognizes a reserve related to expected credit losses. The change in expected credit losses is recorded in the income statement under external expenses. New Wave Group applies the simplified model for expected credit losses on accounts receivable, at which total expected credit losses for the remaining maturity of the receivable are recognised. When assessing future expected credit losses, both historical and forward-looking information is taken into account. Change of provision for expected credit losses on accounts receivable is recognised in the income statement under external expenses. The change of the year is provided in Note 17. Financial liabilities are initially carried at fair value less transaction costs. In subsequent periods these liabi- lities are valued at amortised cost by