Annual Report Gorenje Group 2009

IFRIC 18 Transfers of Assets from Customers (effective prospectively for annual
period beginning on or after 1 November 2009)
The Interpretation requires an entity that receives a contribution in the scope of the Interpretation to
recognize the item as an asset at its fair value if the transferred item meets the criteria for property,
plant, and equipment in IAS 16, Property, Plant and Equipment. The Interpretation also requires the
entity to recognize the amount as revenue; the timing of revenue recognition depends on the facts and
circumstances of the particular arrangement.
IFRIC 18 is not relevant to the Group’s consolidated financial statements as the Group does not
normally receive contributions from customers.
GROUP - 4. DETERMINATION OF FAIR VALUE
A number of the Group’s accounting policies and disclosures require the determination of fair value, for
both financial and non-financial assets and liabilities. Fair values have been determined for
measurement and / or disclosure purposes based on the following methods. When applicable, further
information about the assumptions made in determining fair values is disclosed in the notes specific to
that asset or liability.
(i) Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a business combination is
based on market values. The market value of property is the estimated amount for which a property
could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s
length transaction after proper marketing wherein the parties had each acted knowledgeably and
willingly.
The items of property, plant and equipment are measured at cost.
ii) Intangible assets
The fair value of patents and trademarks acquired in a business combination is based on the
discounted estimated royalty payments that have been avoided as a result of the patent or trademark
being owned. The fair value of other intangible assets is based on the discounted cash flows expected
to be derived from the use and eventual sale of the assets.
(iii) Investment property
An external, independent valuation company, having appropriate recognised professional qualifications
and recent experience in the location and category of property being valued, values the Group’s
investment property portfolio every five years. The fair values are based on market values, being the
estimated amount for which a property could be exchanged on the date of the valuation between a
willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the
parties had each acted knowledgeably and willingly.
In the absence of current prices in an active market, the valuations are prepared by considering the
aggregate of the estimated cash flows expected to be received from renting out the property. A yield
that reflects the specific risks inherent in the net cash flows then is applied to the net annual cash flows
to arrive at the property valuation.
Valuations reflect, when appropriate, the type of tenants actually in occupation or responsible for
meeting lease commitments or likely to be in occupation after letting vacant accommodation, the
allocation of maintenance and insurance responsibilities between the Group and the lessee, and the
remaining economic life of the property. When rent reviews or lease renewals are pending with
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Annual Report Gorenje Group 2009