kontinuita - Komunálna Poisťovňa

NOTES TO
THE FINANCIAL
STATEMENTS
Company establishes a fair value by using valuation
techniques. These include, for example, the use of recent
arm’s length transactions, reference to other financial
instruments that are substantially the same,
discounted cash flow analysis, and option pricing models,
with the maximum use of market inputs and the
minimum inputs that are specific for the Company.
2.6 Impairment of assets
(i) Financial assets carried at amortized cost
At each balance sheet date, the Company assesses
whether there is any objective indication that a financial
asset or a group of financial assets is impaired. A
financial asset or a group of financial assets is impaired
and an impairment loss is recognized only if
there is an objective indication of impairment as a result
of one or more events that have occurred after the
initial recognition of the asset (a ‘loss event’), and that
loss event (or those lost events) has (have) an impact
on the estimated future cash flows of the financial
asset or a group of financial assets that can be reliably
estimated. An objective indication that a financial asset
or a group of financial assets is impaired includes the
following:
• significant financial problems of the debtor or issuer;
a breach of contractual conditions, such as a default in
payments;
• a creditor, due to legal or economic reasons related
to the debtor’s financial problems, gives the debtor a
discount which was originally not meant to be provided;
• it becomes probable that the issuer or debtor will
enter into bankruptcy or other financial reorganization;
• termination of the active market for the given financial
asset due to financial difficulties;
• observable data indicating that there is a measurable
decrease in the estimated future cash flow from a
group of financial assets since the initial recognition of
those assets, although the decrease cannot yet be
matched to individual financial assets in the group, including:
- adverse changes in the solvency of issuers or debtors
in the group; or
- national or local economic conditions that correlate
with defaults on the assets in the group.
The Company first assesses whether objective indications
of impairment exist individually for financial assets
that are significant. If the Company concludes that
no objective indications of impairment exist for an individually
assessed financial asset, whether significant
or not, it includes the asset in a group of financial assets
with similar credit risk characteristics (categorized
by asset type, industrial sector, territory,
maturity, and similar relevant factors) and collectively
assesses them for impairment. Assets that were individually
assessed for impairment and for which an impairment
was identified are not included in a collective
assessment of impairment.
Future cash flows in a group of financial assets that are
collectively assessed for impairment are estimated on
the basis of contractual cash flows from the Company’s
assets and historical loss experience for the Company’s
assets with similar credit risk characteristics.
Historical loss experience is adjusted based on current
observable data to reflect the effects of current conditions
that did not affect the period the historical loss
experience is based on and to remove the effects of
conditions in the historical period that do not exist any
more.
If there is an objective indication that an impairment
loss has been incurred on loans and receivables or investments
held to maturity, the amount of the loss is
measured as the difference between the asset’s carrying
amount and the present value of estimated future
cash flows discounted at the financial asset’s
original effective interest rate. The carrying amount of
the asset is reduced by using a valuation allowance account,
and the loss is recognized in the income statement.
If an investment held to maturity or a receivable
or a loan has a floating interest rate, then the discount
rate for measuring any impairment loss is determined
KONTINUITA ANNUAL REPORT 107