New Wave Group AB Annual_report_2018_EN_HQ | Page 75

NWG // FINANCIAL INFORMATION //
applying the effective interest method.
Interest-bearing liabilities comprise
liabilities to credit institutions. Accounts
payable are recognised when an invoice
has been received. Accounts payable
have a short expected maturity and are
recorded at their nominal value and are
not discounted. A description of risks is
provided in Note 17.
Interest income relating to financial
receivables is recorded as a financial
income. Interest expenses on financial
liabilities are recorded as a financial
expense.
Financial instruments valued at
fair value through profit or loss
Financial instruments valued at fair value
through profit or loss consist of deriva-
tives and additional purchase price and
are valued at their respective fair values.
In cases where no information or data is
available for measuring financial instru-
ments at fair value, generally accepted
valuation methods are used. These may
be more or less dependent on quoted
information data. New Wave Group
holds financial instruments whose
measurement is based on both quoted
information and non-observable data. A
separate calculation is performed by the
management based on this information.
For financial assets and liabilities with
maturities of less than one year, except
for derivatives, fair value is assumed to
be the nominal value. Financial instru-
ments recognized at fair value in the
balance sheet belongs to level two or
three in IFRS 13 hierarchy.
New Wave Group uses derivatives,
essentially currency futures, to manage
financial risks. When a derivatives
contract is concluded the Group chooses
to classify the derivatives as fair value
THE GROUP
hedges or cash flow hedges. The deri-
vatives are carried at fair value through
profit or loss as long as hedge accounting
is not applied. If applied, they are recog-
nized through other comprehensive
income. If the derivatives have a positive
value, they are recorded for as an asset
in the balance sheet and if they have a
negative value they are recorded as a
liability in the balance sheet.
Financial instruments
valued at fair value through
other comprehensive income
Financial instruments valued at fair value
through other comprehensive income
consist of hedge instruments which
form part of an effective cash flow hedge.
Changes in value for such instruments
are recognised in other comprehensive
income. When a hedged transaction
relates to purchases of inventory the
reserve referring to cash flow hedging
is reclassified to the cost of the asset.
Other cash flow hedges are reclassified
to the income statement in the period
or periods when the hedged flows affect
the income statement. However, if a
planned transaction or an assumed obli-
gation is no longer expected to occur, the
cumulative gain or loss recognised in
other comprehensive income, from the
period in which the hedge is applied, is
immediately transferred to the income
statement. Disclosures on individual
hedges are provided in Note 17.
Accounting policies for the
comparison year
The comparison year is reported
according to previous accounting
policies, which are presented in Note 1
in the annual report for 2017.
Leasing
Financial leases, where the Group essen-
tially assumes all risks and benefits
associated with ownership of the leased
object, are recognised in the balance
sheet at the lower of the fair value of the
leased property or the present value of
future minimum lease payments. Lease
payments are allocated between funding
costs and repayment of the outstanding
liability under the lease. Assets held under
a financial lease are depreciated over the
shorter period of the assets useful life and
the lease term. Leases in which the lessor
essentially retains all risks and rewards
associated with ownership are classified
as operating leases. Lease payments are
expensed in the income statement on a
straight-line basis over the term of the
lease.
Stock
Stock is recognised at the lower of cost, as
determined by applying the first in first
out (FIFO) method, and net realisable
value. The net realisable value is the esti-
mated selling price less estimated selling
expenses.
Income tax
Current income tax
Current tax assets and tax liabilities for
current and previous periods are defined
as the amount that is expected to be
received back from or paid to the tax
authority in each country respectively.
The tax rates and tax laws applied in
calculating the amount are those which
have been adopted or announced at the
balance sheet date. Current tax attribu-
table to items recognised in equity and
ANNUAL REPORT // 075