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MEDIASET ESPAÑA COMUNICACIÓN, S.A.
When debt instruments are exchanged whose contractual terms are not substantially different, the original financial
liability is not derecognised, and the commissions paid are recognised as an adjustment to the carrying amount. The
amor tised cost of a financial liability is determined by applying the effective interest rate, which is the rate the makes
the carrying amount of the financial liability on the modification date equal to the cash flows to be paid as per the new
terms.
Financial derivatives and hedges
Cash flow hedges are hedges to exposure to variability in cash flows attributable to a specific risk associated with a
recognised asset or liability or to a highly probable forecast transaction that may affect the income statement. The
effective por tion of the gain or loss on the hedge instrument is recognised directly in equity, whereas the ineffective
por tion is recognised in the income statement.
The amounts recognised in equity are transferred to the income statement when the hedged transaction affects profit
or loss, as well as when financial expense or revenue is recognised, or when a forecast sale or purchase takes place.
When the hedged item is the cost of a financial liability or asset, the amounts recognised in equity are transferred to
the initial carrying amount of the non-financial liability or asset.
If the forecast transaction is no longer expected to take place, the amounts previously recognised in equity are
transferred to the income statement. If a hedge instrument expires, is sold, terminates or is exercised without being
replaced or renegotiated, or its designation as a hedge is revoked, the amounts previously recognised in equity continue
to be recognised under that heading until the transaction occurs. If the related transaction is not expected to take place,
the amount is recognised in the income statement.
The Company’s financial derivatives at 31 December 2011 and 2010 were classified as held for trading, with gains or
losses recognised in profit or loss.
Treasury shares
Treasury shares are recognised in equity as a decrease in “Capital and reserves” when acquired. No loss or gain is shown
in the income statement on sale or cancelation. Expenses incurred in connection with transactions with treasury shares
are recognised directly in equity as a decrease in reserves.
Inventories
In-house production programs are recognised as inventories.These programs are recognised at production cost, which
is determined by considering all costs attributable to the product which are incurred by the Company.
Advances paid for programs are also included,
They are expensed when the related programs are broadcast.
When the net realisable value of inventories is less than acquisition or production cost, the corresponding provision is
recognised in the income statement.
Cash and cash equivalents
This heading includes cash, current accounts, shor t-term deposits and purchases of assets under resale agreements that
meet the following criteria: