3.3 Financial Assets
In accordance with IAS 39 (Financial Instruments: Recognition and Measurement) and IAS 32 (Financial Instruments: Presentation), the Company has adopted the following classification for non-derivative financial assets, based on the type of asset and on management intention at the date of initial recognition. The designation and classification of such financial assets are subsequently reassessed at the end of each reporting period.
Non-derivative financial assets are recognized on the date when the Company becomes party to the contractual terms of the asset. On initial recognition, financial assets are measured at fair value, plus direct transaction costs in the case of financial assets not classified as fair value through profit or loss.
Classification, presentation and subsequent measurement of non-derivative financial assets are as follows:
Assets Owned Until Their Maturity
These securities are exclusively fixed income or determinable income and have fixed maturities, other than loans and accounts receivable, that the Company has the intention and the ability to keep until maturity. After their initial posting at their fair value, they are valued and posted to the accounts at the cost amortized on the basis of the effective interest rate (“EIR”) method.
The assets owned until their maturity are monitored for any objective indication of impairment. A financial asset is impaired if its book value is greater than its recoverable amount as estimated during impairment tests. The impairment is recorded to the income statement.
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented in current assets with loans with a maturity of less than 12 months are presented within “other current assets” and with trade receivables presented within “accounts receivable.” Loans with a maturity of more than 12 months are presented as “long- term loans and advances” within “other non-current assets.” Those financial assets are measured at amortized cost using the effective interest method.
The loans and receivables are monitored for any objective indication of impairment. A financial asset is impaired if its book value is greater than its recoverable amount as estimated during impairment tests. The impairment is recorded in the Consolidated Statements of (Loss).
The loans and receivables also include the deposits and guarantees, which are classified under “Non-current financial assets” in the Consolidated Statements of Financial Position.
Assets at Fair Value Per the Consolidated Statements of (Loss)
These assets are classified on the balance sheet in the following line items: Other non-current assets, Current financial assets and Cash and cash equivalents.
Financial assets at fair value through profit or loss comprise assets held for trading (financial assets acquired principally for the purpose of reselling them in the near term, usually within less than 12 months), and financial instruments designated as fair value through profit and loss on initial recognition in accordance with the conditions for application of the fair value option.
Realized and unrealized foreign exchange gains and losses on financial assets in currencies other than the euro are recognized in the income statement in Financial income or Financial expenses.
Assets Available for Sale
The assets available for sale include, primarily, securities that do not meet the criteria of the definition of the other categories of financial assets. They are measured at their fair value, and the changes in value are recorded in the Consolidated Statements of Changes in Shareholders’ Equity.
The fair value corresponds to the market price for those securities that are listed on the stock exchange or to an estimate of the use value for unlisted securities, determined on the basis of the financial criteria most appropriate for the specific situation of each security. When there is an objective indication of the impairment of these securities, the accumulated impairment that has been recorded in the Consolidated Statements of Changes in Shareholders’ Equity is recognized in the Consolidated Statement of (Loss).