NWG // FINANCIAL INFORMATION //
THE GROUP
Note 16 - Financial instruments and financial risk management
Accounting policies
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity . Financial instruments recognized in the Group ´ s consolidated balance sheet include accounts receivable , other receivables , derivatives , liquid assets , long-term and short-term interest-bearing liabilities , accounts payable , other liabilities and accrued expenses . Financial instruments are initially measured at fair value and , subsequently , at fair value or accumulated amortized cost , depending on their classification . Transactions costs are included in the assets fair values , except in cases in which the change in value is recognized in the Group ´ s consolidated income statement .
A financial asset is derecognized from the Group ´ s consolidated balance sheet when all benefits and risks associated with the ownership have been transferred . A financial liability is derecognized from the Group ´ s consolidated balance sheet when the obligations of the contract have been met , or otherwise extinguished .
On the acquisition date , New Wave Group classifies financial instruments into the following categories :
Financial assets measured at amortized cost
The Group ’ s financial assets measured at amortized cost are essentially accounts receivable , other receivables and liquid assets . Liquid assets comprise liquid bank deposits and available cash . Accounts receivable include invoiced as well as non-invoiced receivables ( recognized when the Group ’ s right to payment is assessed as unconditional ). The expected maturity of accounts receivable is short , and the value is therefore recognized at nominal amount without discounting , less provision for expected and occurred credit losses . New Wave Group applies the simplified model for expected credit losses on accounts receivable , at which total expected credit losses for the remaining maturity of the receivable , which is expected to be less than one year , are recognized . Change of provision for expected credit losses on accounts receivable is recognized in the Group ’ s income statement under external expenses .
Financial assets measured at fair value through profit and loss
The Group does not have any financial assets measured at fair value in the income statement in 2020 and 2019 .
Financial assets measured at fair value through other comprehensive income
New Wave Group uses derivatives , essentially currency futures , to manage financial risks . Financial instruments measured 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 recognized in other comprehensive income . Any non-effective part of cash-flow hedges is recorded immediately in the income statement . Cash-flow hedges are reclassified to the income statement in the period or periods when the hedged flows affect the Group ’ s consolidated income statement . However , if a planned transaction or an assumed obligation is no longer expected to occur , the cumulative gain or loss recognized in other comprehensive income , from the period in which the hedge was applied , is immediately transferred to the Group ´ s consolidated income statement .
Financial liabilities measured at amortized cost
The Group ’ s financial liabilities measured at amortized cost are essentially interest-bearing liabilities , accounts payable , other liabilities and accrued expenses . Interest-bearing liabilities consist of liabilities to credit institutes and lease liabilities . After the initial valuation , to fair value less transaction costs , the interest-bearing liabilities are measured at amortized cost by applying the effective interest method . The expected maturity of accounts payable is short and the item is therefore recognized at the nominal amount without discounting .
Financial liabilities measured at fair value through profit and loss
The Group does not have any financial liabilities measured at fair value in the income statement in 2020 and 2019 .
Financial liabilities measured at fair value through other comprehensive income
New Wave Group uses derivatives , mainly currency futures . See section Financial assets measured at fair value through other comprehensive income for a description on measurement and valuation .
Key estimates and assumptions
Accounts receivable are short-term by nature and consequently the risk assessment horizon is short . When assessing future expected credit losses , both historical information as well as current and forecasted situations are taken into account . An assessment is made if the total reserve is reasonable in relation to the total outstanding accounts receivable , taking into account past credit losses .
092 // ANNUAL REPORT