kontinuita - Komunálna Poisťovňa

NOTES TO
THE FINANCIAL
STATEMENTS
cial assets are initially recognized at fair value plus
transaction costs, except for financial assets carried at
fair value through profit or loss.
Financial assets are derecognized from the balance
sheet when the rights to receive cash flows from them
have expired, or when they have been transferred to
another accounting entity together with all the risks
and rewards arising from the ownership.
Financial assets are classified in the following four categories,
depending on the purpose for which they were
acquired. The Company’s management sets the classification
of financial assets at initial recognition and
reassesses it at every balance sheet date.
Financial assets at fair value through profit or loss are
assets which, when initially recognized, were designated
to be stated at fair value through profit or loss.
Financial assets carried at fair value through profit or
loss are assets which are managed and the performance
of which is evaluated on a fair value basis in line
with the Company’s investment strategy. Information
about the fair values of these financial assets is provided
internally to the Company’s management. The
Company’s investment strategy is to invest in equity
and debt securities in connection with their fair values.
Loans and receivables are non-derivative financial assets
with fixed maturity that are not quoted on an active
market. They do not include financial assets that
the Company either intends to sell in the short term or
that were classified as stated at fair value through
profit or loss, or as available for sale when initially recognized.
Receivables from insurance contracts and
loans provided to the insured persons are also classified
in this category, and are reviewed for impairment
when performing an impairment review of loans and
receivables.
Investments held to maturity are non-derivative financial
assets with fixed or determinable payments and
fixed maturity that the Company has the positive intent
and ability to hold to maturity.
Financial assets available for sale are non-derivative
financial assets that are either designated to this category
or not classified in any of the other categories.
Financial assets available for sale and financial assets
at fair value through profit or loss are subsequently
measured at fair value. Investments held to maturity
and loans and receivables are carried at amortized cost
using the effective interest method. Realized and unrealized
gains and losses arising from changes in the
fair value of financial assets stated at fair value
through profit or loss are included in the income statement
in the period in which they arise. Unrealized
gains and losses arising from changes in the fair value
of financial assets available for sale are recognized in
equity.
When financial assets available for sale are sold or impaired,
the accumulated fair value adjustments previously
recognized in equity are posted to the income
statement as ‘Net realized gains on investments’.
Gains and losses arising from changes in the fair value
of financial assets stated at fair value through profit or
loss are recognized in the income statement as ‘Net
gains from the revaluation to fair value of financial assets
at fair value through profit or loss’.
Interest on financial assets available for sale are calculated
using the effective interest method and is recognized
as income in the income statement. Dividends
on financial assets available for sale are recognized in
the income statement when the Company’s right to receive
payments is established and inflow of economic
benefits is probable. Both are included in the investment
income line.
The fair value of quoted financial assets is based on
their current bid prices at the balance sheet date. If the
market for a specific financial asset is not active, the
KONTINUITA ANNUAL REPORT 105