Note 3 Accounting estimates and judgements The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the group’s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement or complexity. The areas involving significant estimates or judgements are: • Consolidation of subsidiaries Fiven Accounting policy is to consolidate all subsidiaries that are controlled by Fiven as defined in IFRS 10 Consolidated Financial Statements, in as so far as the effect of non-consolidation would not be material. Fiven has applied judgement when concluding that the effect of not consolidating the Venezuelan subsidiaries is immaterial (ref note 4). • Impairment indicators Fiven has made an assessment to identify any indications to the effect that material tangible or intangible assets with a finite life may be impaired. Such indications have not been identified and therefore a full estimation of recoverable amounts has not been made. The evaluation of external and internal sources and the potential effect involves considerable judgement. • Impairment testing of goodwill and intangible assets with an indefinite life. Goodwill and intangible assets with an indefinite useful life are not amortized. These assets are therefore tested at least annually for impairment. The test process involves identifying expected cash flows relating to the assets and discounting the cash flows to arrive at an estimated value. Future cash flows are based on specific assumptions and plans adopted by the company. The impairment testing process involves considerable judgement and estimation with regard to the specific assumptions and plans made. See note 17 Impairment Assessments. • Estimation and judgements regarding environmental liabilities Fiven has operations in Norway, Brazil, Belgium and Venezuela representing potential exposure towards environmental consequences. A provision is recognized when the group has a present obligation and it is probable that an outflow of resources is required to settle the obligation. Any significant contingent liabilities are disclosed in the notes. Contingent liabilities are liabilities which are not recognized because they are possible obligations that have not yet been confirmed, or they are present obligations where an outflow of resources is not probable. The process and procedures used in assessing the need for a provision or alternatively information regarding contingent liabilities involves considerable judgements with regard to assessing potential obligations in terms of probability and potential outflow of resources. See note 24 Provisions. • Estimation and judgements regarding contingent liabilities Contingent liabilities are not recognized in the annual accounts. Significant contingent liabilities are disclosed, with the exception of contingent liabilities that are unlikely to be incurred. Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. Fiven Annual Report 2021 42 Financial statements
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