Cloudberry Annual report 2021 Financial statements 108 Deferred tax assets Significant management judgement is required when determining the amount of deferred tax asset to be recognised. Deferred tax asset is to be recognised for unused tax losses to the extent that it is probable that taxable profit will be available within reasonable time against which the losses can be utilised. Uncertain tax positions and potential tax exposures are analysed individually and the best estimate of the probable amount for liabilities to be paid and assets to be received are recognised within current tax or deferred tax as appropriate. See note 16. Lease When calculating lease liability, the discount factor is a significant estimate. In the absence of an identifiable discount rate, implicit in the lease agreement, the discount rate used is the Groups incremental borrowing rate. Judgement is also used to assess the lease period and the assessment if a lease option will be used and included in the estimated lease period to calculate the lease liability and right to use asset. For the lease contracts with options, these options are related to very long lease contracts on fixed land lease and the judgement is not material for the valuations of the lease liability. See note 25 Lease agreements. Share based payment The fair value of management warrant programme makes use of an estimation model, Black-Scholes for calculation the call option value at grant date and at the balance sheet day. This model makes use of management estimates for expected life option, volatility, and expected dividend yield. See note 13 Employee benefits and share based payments. Asset retirement obligation The calculation of the decommissioning obligation makes use of several estimates, the future cost of decommissioning, the timing of decommissioning, the probability of a landowner call option to purchase the power plant at the end of the lease period and the valuation of net present value with the appropriate discount rate. Management seeks to at least annually evaluate and update with the accessible information all estimates in the calculation. Application of accounting policy Due to Cloudberry’s business activities, management must apply judgement in determining the appropriate accounting policies in areas where application of the Groups accounting may have a material impact on the accounting treatment in the financial statements. Such areas include: · Classification of power purchase agreements note 10 · Classification of energy and other revenues note 12 · Classification of developing projects note 17 and 18 · Classification of investments made together with third parties note 20 Note 4 Business segments The Group reports its operations in three business segments; Production, an active owner of renewable power assets in the Nordics; Development, a greenfield development both on and off-shore with a long history of organic, in-house developments of wind and hydropower assets in Norway and Sweden; and a cost efficient Corporate segment ensure management tasks for the Group like financing, marketing, reporting and other corporate activities. From 2022, after the acquisition of Captiva (see note 29 subsequent events), a fourth business segment, Operations will be established, comprising this business. The Group reports on proportionate financials (APM) for each business segment. Management provides this because these measures are used internally for key performance measures (KPIs). These measures represent the most important KPI’s to support decision making for achieving the Group’s strategic goals. Proportionate financials are further defined and described below under Proportionate financials and in the APM section of this report.
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