NWG Annual Report 2019 - EN NWG Annual Report 2019 - EN | Page 75

NWG // FINANCIAL INFORMATION //
lease payments include fixed payments,
variable lease payments that depend on an
index or a rate and amounts expected to
be paid under residual value guarantees.
Right-of-use assets are presented as
tangible fixed assets and are measured at
cost, less accumulated depreciations and
write-downs, if any. The cost of a right-
of-use asset contains the initial amount
of the lease liability adjusted for any lease
payments made before the commencement
date, less any lease incentives received.
Moreover, any initial direct expenses
incurred are included as well. The leased
asset is depreciated on a straight-line basis
over lease term, or over the estimated
useful life if the ownership is transferred
to the New Wave Group at the end of the
lease term.
The Group applies the short-term
lease practical expedient to its short-term
leases (i.e., those leases that have a lease
term of twelve months or less from the
commencement date). It also applies the
lease of low-value assets practical expe-
dient to leases that are considered to be
low value. Lease payments on short-term
leases and leases of low-value assets are
recognized as expenses on a straight-line
basis over the lease term. Variable lease
payments that do not depend on an index
or a rate are recognized as expenses in the
period in which they occur.
Accounting policies for the
comparison year
Transactions before January 1, 2018, are
reported according to previous accounting
policies, which are presented in note 1 in
the annual report for 2018.
Inventory
Inventory is recognized at the lower of
cost, as determined by applying FIFO
method (“first in first out”), and net reali-
zable value. The net realizable value
is the estimated selling price less esti-
mated selling expenses. Right-of-return
assets is included in the stock value
THE GROUP
and are measured at the value of the
costs of goods sold at the point of sale.
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 calcu-
lating the amount are those which have
been adopted or announced at the balance
sheet date. Current tax attributable to
items recognized in equity and in other
comprehensive income are recognized in
equity and other comprehensive income.
Deferred income tax
Deferred tax is recognized in accordance
with the balance sheet method for all
temporary differences that arise between
the tax values of assets and liabilities and
their carrying amounts in the consoli-
dated accounts. Deferred tax liabilities
are accounted for taxable temporary diffe-
rences. Exempt are temporary differences
for consolidated goodwill or when an asset
or liability is recognized as part of a trans-
action which is not a business combination
and which, at the time of the transaction,
neither affects the reported profit or the
taxable profit or loss (i. e. initial recog-
nition exemption).
Deferred tax assets are recognized
for all deductible temporary differences,
including loss carry-forwards to the extent
that it is likely that a taxable profit will be
available against which the tax asset can
be offset. The valuation of deferred tax
assets is reviewed at each balance sheet
date and adjusted to the extent that it is no
longer probable that sufficient profits will
be generated to enable all or part of the loss
carry-forwards to be used.
Deferred tax assets and tax liabilities
are determined at the tax rates applicable
for the period in which the asset is realized
or the liability is paid based on tax rates
(and legislation) that have been adopted or
announced at the balance sheet date.
Deferred tax assets and tax liabilities
are offset if there is a legal right to offset
the amounts against each other and the
deferred tax is attributable to the same unit
in the Group and the same tax authority.
Pensions
Both defined benefit and defined contri-
bution pension plans are used in New
Wave Group. The Group has defined
benefit pension plans that are managed by
Alecta. This is a plan which covers several
employers, and, as Alecta does not have
sufficient information available for measu-
rement, the Group’s pension obligation
with Alecta is accounted for as a defined
contribution plan. The Group’s contri-
butions to defined contribution pension
plans are charged to the income statement
in the period to which they are attribu-
table. For information regarding pension
plans, see note 6.
Operating segment
reporting
The operating segments Corporate, Sports
& Leisure, and Gifts & Home Furnishings
comprise the Group’s segments. Under this
classification, each trademark is grouped
to the various operating segments. See
note 3.
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