ANNUAL REPORT 2008 - Gorenje Group

148
2008
in the estimates used to determine the recoverable amount. An impairment loss is reversed only to
the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(j) Employee benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed
as the related service is provided.
(k) Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the liability.
(i) Warranties
A provision for warranties is recognised when the underlying products or services are sold. The
provision is based on historical warranty data and a weighting of all possible outcomes against their
associated probabilities.
(ii) Site restoration
In accordance with the Company’s published environmental policy and applicable legal requirements,
a provision for site restoration in respect of contaminated land, and the related expense, is
recognised when the land is contaminated.
(iii) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the
Company from a contract are lower than the unavoidable cost of meeting its obligations under the
contract. The provision is measured at the present value of the lower of the expected cost of terminating
the contract and the expected net cost of continuing with the contract. Before a provision is
established, the Company recognises any impairment loss on the assets associated with that contract.
(iv) Provisions for retirement bonuses and jubilee benefits
In accordance with the statutory requirements, the collective agreement, and the internal regulations,
the Company is to pay to its employees jubilee benefits and termination benefit upon retirement.
For these obligations, long-term provisions are created.
Provisions are determined by discounting, at the balance sheet date, the estimated future benefits
in respect of retirement bonuses and jubilee benefits. The obligation is calculated separately
for each employee by estimating the costs of retirement bonus and the costs of all expected jubilee
benefits until retirement. The selected discount rate is 7.75% p.a. and represents the rate of return
on long-term government bonds. The calculation is performed by a certified actuary using the
projected unit method.
( l ) R e v e n u e
(i) Revenue from the sale of products
Revenue from the sale of products, merchandise and materials is measured at the fair value of the
consideration received or receivable, net of returns and allowances, trade discounts and volume re-