Komplett Bank Annual Report 2020

Kategori etter IFRS 9 Vesentligste finansielle eiendeler Kriteriet for å havne i kategorien og regnskapsmessig behandling av eiendeler som havner i kategorien Losses on loans in the statement of profit and loss In the statement profit and loss, the itemLosses on loans consists of the book value of impaired loans, the difference between the book value and the real value of the consideration for the sale (portfolio sale), payments that are received on loans that have previously been impaired and changes to the impairments of loans. The effect of IFRS 9 on capital adequacy As of the date of implementation (1 January 2018), the effect of the transition from IAS 39 to IFRS 9 was an increase in loss impairments of NOK 157.8million. After tax effects, this resulted in a reduction in equity of NOK 118.4million. Komplett Bank has not restated the comparative figures to conform to the IFRS 9 standard. The Bank uses the transition rules published by the EU, which permit the gradual phasing-in of the effects that IFRS 9 will have on the Bank’s capital adequacy. In 2018, 5 per cent of the transitional effect was recognised in line with the transitional rules and a further 10 per cent in 2019. In 2020 additional 15 per cent of the transitional effect was recognised, while the corresponding figures for subsequent years are expected to be as follows: 20 per cent (2021) and 25 per cent (2022). The transition rules will be fully phased in at the beginning of 2023. 2. Fixed assets Fixed assets are recognised at historical cost less accumu- lated depreciation and any impairments. The cost includes the purchase price of the asset and other directly attributable costs, such as shipping expenses and non-refundable taxes and purchase fees. Ordinary depreciation charges operating expenses and appears on a separate line in the income statement, together with depreciation of intangible assets. Depreciation is based on the cost minus the expected residual value and allocated on a straight-line basis over the expected useful life of the asset. The value of fixed assets is derecognised in the balance sheet on dis- posal or when no further future economic benefits are expected from using the asset or on disposal. In cases where there are indications of an impairment of non-cur- rent assets, the Bank will measure the non-current asset’s recoverable amount. The recoverable amount is the higher of the net sales value and the value in use. If the recoverable amount is lower than the carrying amount, the non-current asset is written down to the recoverable amount. The impairment is reversed in cases where the criteria for recognising an impairment are no longer present. In no circumstances can the reversal lead to the asset’s value exceeding the original cost price or the amount that would have been recognised in the balance sheet if the asset had followed the original depreciation plan. Where the depreciation plan is changed, the effect is allocated over the remaining depreci- ation period. The Bank’s fixed assets are depreciated from 3-5 years. 3. Other intangible assets Intangible assets are recognised in the balance sheet to the extent that it is probable that financial benefits will accrue to the Bank in the future and these expenses can be measured reliably. Intangible assets are recognised in the balance sheet at cost minus accumulated amortisation and any impairments. Cost means the amount in cash or cash equivalents paid at the date of acquisition or manufacture. Expenses relating to maintenance of software, systems etc. are recognised as expenses on an ongoing basis. Assets with a limited lifetime are amortised using the straight-line method over the expected useful life from the date when the asset is available for use. The Bank assess that using straight-line depreciation is a systematic allocation of the depreciable amount over the expected useful life of the asset. In the case of intangible assets with a limited useful life, where there are indications of impairment, the Bank carries out measurements of the asset’s recoverable amount. The recoverable amount is the higher of the net sales value and value in use. If the recoverable amount is lower than the carrying amount, the intangible asset is written down to the recoverable amount. Intangible assets are derecognised on disposal or when no further future economic benefits are expected from using or disposing of the asset. The Bank’s intangible assets are depreciated over 3-5 years. Expenses from in-house development are recognised in the balance sheet to the extent that a future financial benefit attached to the development of an identifiable intangible asset can be identified and the expenses can be reliably measured. Otherwise, these expenses are recognised as expenses on an ongoing basis. 4. Tax 4a. Deferred tax liabilities/deferred tax assets Deferred tax liabilities/deferred tax assets are recognised in line with IAS 12. Deferred tax liabilities/deferred tax assets are calcu- lated at a nominal rate based on temporary differences that exist between the accounting and taxable values existing at the end of the accounting period. Tax-increasing and tax-reducing temporary differences that reverse or could be reversed in the same period are set off and recognised net in the balance sheet. The applicable rate of tax forming the basis for the calculation of deferred tax liabilities/deferred tax assets is 25 per cent. Komplett Bank Annual Report 2020 51