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