Page 23 - eco_eng

a.1) Loans and receivabless

Loans and receivables comprise fnancial assets arising from the sale of goods or the rendering of services in the ordinary course of the Company’s business. The category also includes trade receivables, which are defned as fnancial assets that, in addition to not being equity instruments or derivatives, have no commercial substance, have fxed or determinable payments and are not traded on an active market. This category does not include fnancial assets for which the Company might not substantially recover all of its initial investment due to circumstances other than credit impairment.

Following initial recognition, fnancial assets included in this category are measured at amortized cost. Interest is recognized in the income statement using the efective interest rate method.

Nevertheless, trade receivables that mature within less than one year with no contractual interest rate, as well as advances and loans to personnel, dividends receivable and called-up payments on equity instruments, the amount of which is expected in the short term, are carried at nominal value both at initial and subsequent remeasurement, when the efect of not discounting cash fows is not signifcant.

Loans and receivables maturing in less than twelve months as of the balance sheet date are classifed as current, and those maturing at over 12 months as non-current.

a.2) Held-to-maturity investments

Held-to-maturity investments include debt instruments with fxed maturities and fxed or determinable payments traded on active markets and which the Company has the positive intention and the fnancial capacity to hold to maturity.

Following initial recognition, fnancial assets included in this category are measured at amortized cost. Interest is recognized in the income statement using the efective interest rate method.

a.3) Financial assets held for trading

A fnancial asset is considered to be held for trading when:

a) It is originated or acquired to be sold in the short term.

b) It is part of a portfolio of identifed fnancial instruments that are managed together and for which there is evidence of a recent pattern of short-term proft taking, or

c) It is a derivative fnancial instrument, providing that is not a fnancial guarantee contract and has not been designated as a hedging instrument.

After initial recognition, these assets are stated at fair value including any transaction costs relating to their sale. Changes to fair value are recognized in the income statement for the year. The Company maintained no investments of this type at year-end 2010 and 2009.

23

Financial Statements, Management and Corporate Governance Report. 2010