Annual report 2004 (PDF, 4141 kB) - Unicredit Bank

(o)
Receivables
Receivables are stated at nominal value less provision for doubtful amounts. Irrecoverable
receivables are written off upon completion of bankruptcy proceedings against the debtor. If a
receivable is purchased, the purchase price includes all expenses connected with the purchase,
e.g. expenses for specialist valuation of purchased receivables, fees to lawyers and
commissions.
(p)
Provisions
Specific provisions are recognised when the Bank has a present obligation as a result of past
events, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, and a reliable estimate of the amount of the obligation can be
made. In addition, general provisions for banking risk recorded prior to 1 January 2002 are
recognised in the balance sheet, however, these must be utilised or written back to income by
31 December 2005. All provisions are presented in liabilities.
Additions to provisions are recognised in the income statement, their utilisation is recognised
together with expenses or losses, for which purpose they were created in the income
statement. Release of provisions in case they are no longer necessary is recognised in the
income.
Provisions are set aside in the currency, in which the settlement is expected to be made,
so that related exchange differences arising are also recognised in the same way
as the provision.
(q)
Allowances
Allowances are deducted from the cost of each impaired asset. The amount of allowance
for impaired loans and other assets is based on appraisals of these assets at the balance sheet
date.
Additions to allowances are recognised in the income statement, their utilisation is recognised
together with expenses and losses, connected with the decrease of assets, in the income
statement. Release of allowances in case they are no longer necessary is recognised in the
income.
Allowances for assets denominated in foreign currency are created in foreign currency.
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