Page 22 - eco_eng

Impairment of non-current nonfnancial assets

The Company assesses at least at each year-end whether there is an indication that a non-current asset or, where applicable, a cash-generating unit may be impaired. If any such indication exists, and in all events when goodwill or intangible assets have indefnite useful lives, the Company estimates the asset’s recoverable amount.

The recoverable amount is the higher of the cash-generating unit’s (CGU) fair value less cost to sell and value in use. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired. To assess value in use, expected future cash fows are discounted to their present value using risk-free market rates, adjusted by the risks specifc to the asset. For those assets that do not generate cash infows largely independent of those from other assets or groups of assets, the recoverable amount is determined for the CGU to which the asset belongs.

Impairment loss and its reversion are recognized in the income statement. Impairment loss is reversed only if the circumstances giving rise to it have ceased to exist, except those related to goodwill. The reversal is limited to the carrying amount that would have been determined had no impairment loss been recognized for the asset.

Financial instruments

Financial assets

A) Recognition and measurement

Financial instruments are classifed into one of the following categories for measurement purposes:

1. Loans and receivables

2. Held-to-maturity investments

3. Financial assets held for trading

4. Other fnancial assets at fair value through proft or loss

5. Investments in group companies, joint ventures and associates

6. Available-for-sale fnancial assets

Financial assets are initially recognized at fair value. Unless there is evidence to the contrary, fair value is the transaction price. The transaction price is equivalent to the fair value of the consideration paid plus directly attributable transaction costs, except, for fnancial assets held for trading and other fnancial assets at fair value through proft or loss, directly attributable transaction costs are recognized directly in the income statement of the year in which the fnancial asset is acquired. In addition, for fnancial assets held for trading and available-for-sale fnancial assets, preferential subscription and any similar rights acquired will be part of the initial measurement.

22

GESTEVISION TELECINCO, S.A.