4.4 Legal risk - Scor

fair value less cost to sell and its value in use. The value in use is assessed using an internal discounted cash flow model
based on current market assumptions and considers rental status, completeness of construction and renovation work, as
well as recent developments within the local real estate market. If the recoverable amount is greater than 20% below the
carrying amount, the resulting impairment loss is recognized in the statement of income.
Own-use properties are assessed for impairment whenever there is an indication that the property may be impaired.
Finance leases
Investment properties acquired through financial lease agreements are recorded on the balance sheet as assets based on
the present value of future rental payments and any purchase option. Subsequent to the initial recognition they are
accounted for as investment properties at cost, net of accumulated depreciation and impairment losses. The corresponding
debt is recorded under “financial liabilities” and is amortized based on the effective interest rate method.
Rental income
Rental income from investment properties is recorded on a straight-line basis over the term of the current rental agreements.
(H) FINANCIAL INSTRUMENTS
Financial investments
The Group classifies its financial assets in the following categories: available-for-sale, fair value through income, loans and
accounts receivable and cash and cash equivalents. There are currently no assets classified as held-to-maturity. Sales and
purchases of assets are recorded on the settlement date. Once it has been initially recorded, an asset is measured
according to its asset category, determined according to the methods set forth below. Financial assets are derecognized
when the contractual rights to the cash flow of the financial asset expire or are transferred, and when the Group has
substantially transferred the risks and rewards inherent to the ownership of the financial asset.
Categories of financial assets
(a) Available-for-sale financial assets
Available-for-sale assets include non-derivative assets that are either classified as available for sale or not allocated to
another category.
Available-for-sale financial assets are recorded at their fair value. Unrealized gains and losses and the respective foreign
exchange resulting from variations in the fair value of a non-monetary available-for-sale asset are recorded directly in
shareholders’ equity. Variations due to foreign exchange for monetary available-for-sale assets are recorded through
income.
When an asset is sold, the accumulated gains and losses included in equity are transferred to realized gains and losses
from the sale of investments in the statement of income, net of any amounts previously recorded through income.
Interest on debt instruments is calculated in accordance with the effective interest method, which includes the amortization
of any premiums or discounts and is recorded in the statement of income.
Dividends on equity instruments are recorded in the statement of income when the Group’s right to receive payment has
accrued.
(b) Financial assets at fair value through income
This category includes financial assets held for trading purposes and those designated at fair value through income upon
initial recognition in the financial statements. Gains and losses from changes in the fair value of financial assets classified
under this category are recognized in the statement of income in the period in which they occur.
(c) Loans and accounts receivable
This category includes funds held by ceding companies as collateral for underwriting commitments included at the amount
deposited.
Non-derivative financial assets, where payment is fixed or determinable and which are not listed on an active market, are
also included within this category and these are recognized at amortized cost using the effective interest rate method.
Loans and accounts receivable include short-term deposits or investments with a maturity of more than three months but
less than twelve months at the date of purchase or deposit.
Loans and accounts receivable include a provision for recoverability if deemed necessary.
(d) Held-to-maturity
The held-to-maturity financial asset category is currently not used.
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