Cloudberry Annual report 2021 Financial statements 106 Borrowing costs Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset is includes as a part of cost. Other borrowing costs are recognised as an expense. Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: · Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities · Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, directly or indirectly, in a non-active market · Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable and make use of best estimate Cash and cash equivalents Cash and cash equivalents include deposits held at call with financial institutions, commercial papers and other short term interest-bearing securities or highly liquid investments (money market funds) that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Placements in money market funds are made to diversify risk and at the same time secure high liquidity of the placements to be able to meet short term cash commitments. The funds are larger funds with established have low interest rate risk and low credit risk. Placements in money market funds are classified as cash equivalents as the placements are short term placements and can be redeemed at any time without restrictions or cost (2-3 days settlement). The placements have insignificant risk of change in value as they are placements with the lowest risk profiles. Taxes Income tax is calculated in accordance with ordinary tax rules and by applying the adopted tax rate. The tax expense in the statement of comprehensive income comprises taxes payable and changes in deferred tax liabilities and deferred tax assets. Taxes payable are calculated on the basis of the taxable income for the year. Deferred tax liabilities and deferred tax assets are calculated on the basis of temporary differences between the accounting and tax values and the tax effect of losses carried forward. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Deferred tax assets are recognised to the extent that it is probable that they will be utilised. Tax related to items recognised in other comprehensive income is also recognised in other comprehensive income, while tax related to equity transactions is recognised in equity.
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