Fiven Annual Report 2020

If the fair value of the equity exceeds the acquisition cost in a business combination, the difference is recognized as income immediately on the acquisition date. Government grants Government grants are recognized when it is reasonably certain that the company will meet the conditions stipulated for the grants and that the grants will be received. Operating grants are recognized systematically during the grant period. Grants are recognized as other income. Investment grants are capitalized and recognized systematically over the asset’s useful life. Investment grants are recognized as a deduction of the asset’s carrying amount. Financial assets The Group´s financial assets are: derivatives, trade receivables and cash and cash equivalents. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow charac- teristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Group initially measures a financial asset at its fair value. The Group classified its financial assets in two categories: • Financial assets at amortized cost • Financial assets (derivatives that do not qualify for hedge accounting) at fair value through profit or loss The Group measures financial assets at amortized cost if both of the following conditions are met: • The financial asset is held within a business model with the objective to hold financial assets in order to collect contrac- tual cash flows and, • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding Financial assets at amortized cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired. The Group’s financial assets at amortized cost include receiv- ables and other short-term deposits. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under IFRS 15 Revenue from contracts with customers. Financial assets at fair value through profit or loss Currency derivatives used as an economic hedge, but are not designated as hedging instruments for hedge accounting under IFRS 9, are carried at fair value. Changes in fair value are charged to the profit or loss statement. Derecognition of financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated statement of financial position) when: • The rights to receive cash flows from the asset have expired, or • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either a. the Group has transferred substantially all the risks and rewards of the asset, or b. the Group has neither transferred nor retained sub- stantially all the risks and rewards of the asset, but has transferred control of the asset Financial liabilities Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, or as hedging instruments not qualifying for hedge accounting, as appro- priate. Derivatives are recognized initially at fair value. Loans, borrowings and payables are recognized at fair value net of directly attributable transaction costs. Derivatives are financial liabilities when the fair value is nega- tive, they are accounted for similarly as derivatives as assets. Loans, borrowings and payables After initial recognition, interest-bearing loans and borrow- ings are subsequently measured at amortized cost using the Effective Interest (EIR) method. Gains and losses are recog- nized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss. Payables are measured at their nominal amount when the effect of discounting is not material. Derecognition of financial liabilities A financial liability is derecognized when the obligation under Fiven Annual Report 2020 Financial statements   37