ANNUAL REPORT 2008 - Gorenje Group

144
2008
Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are
recognised directly in equity.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated
or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or
loss previously recognised in equity remains there until the forecast transaction occurs. When the
hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying
amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred
to profit or loss in the same period that the hedged item affects profit or loss.
Economic hedges
Hedge accounting is not applied to derivative instruments that economically hedge monetary assets
and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives
are recognised in profit or loss as part of foreign currency gains and losses.
(iii) Share capital
Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid,
which includes directly attributable costs, is net of any tax effects, and is recognised as a deduction
from equity. Repurchased shares are classified as treasury shares and are presented as a deduction
from total equity. When treasury shares are sold or reissued subsequently, the amount received is
recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred
to retained earnings or reserves.
Dividends are recognised as a liability on the day of transaction.
(c) Subsidiaries
Investments in equities of subsidiaries are valued at cost. Costs that may be associated with the acquisition
of a subsidiary increase the cost of purchase of the investment in subsidiary. Profit participation
is recognised as income in the period when the Shareholders’ Meeting adopts the resolution
on the dividend payout.
(d) Property, plant and equipment
(i) Recognition and measurement
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of
self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable
to bringing the asset to a working condition for its intended use, and the costs of dismantling
and removing the items and restoring the site on which they are located.
Borrowing costs related to the construction of property are recognised in profit or loss as incurred.
When parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items of property, plant and equipment.
Fair value model or revaluation model is applied to land. Revaluation effects are recorded through
equity. Impairment loss of land whose value had previously been increased is directly charged
against revaluation surplus in equity, or else it is recognised in profit or loss. The revaluation of land