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22
financial statements 2011
derivative instruments to hedge against changes in
the interest rates of loans. Derivative contracts drawn
up for this purpose are measured at fair value on
the balance sheet date, and changes in the fair value
are recognized through profit or loss under financial
income or expenses.
Loans and other receivables
are assets to which no
derivatives are applied, and which are specifically classi-
fied in this group or not classified in any other group.
They are valued at amortized cost and are recog-
nized in the balance sheet, according to their nature, as
current assets or non-current assets (those maturing
in over 12 months). In the Edita Group, this group
includes sales receivables and other receivables. The
amount of uncertain receivables is estimated on the
basis of the risk of individual assets. Impairment losses
are recognized as an expense in the income statement
under other operating expenses.
Available-for-sale financial assets are assets
to which
no derivatives are applied, and which are specifically
classified in this group or not classified in any other
group. Available-for-sale financial assets comprise listed
and unlisted equities. They are valued at fair value.
If the fair value of unlisted shares cannot be reliably
assigned, the assets are valued at the original cost or
probable value, whichever is the lowest.
Changes in the fair value of available-for-sale
financial assets are recognized in other items of
comprehensive income and are disclosed in the fair
value reserve, less the tax effect. Accumulated changes
in fair value are transferred from shareholders’ equity
to the income statement when the investment is
sold or when its value has been impaired to such an
extent that an impairment loss should be recognized.
Available-for-sale investments are included in noncur-
rent assets, except when the intention is to keep them
for less than 12 months from the balance sheet date, in
which case they are included in current assets.
Cash and cash equivalents
consist of cash, demand
deposits and other current, extremely liquid, invest-
ments, which are easily exchangeable for a previously
known amount of cash assets and whose risk of a
change in value is minimal. The Group has changed the
content of cash and cash equivalents in the statement
of cash flows so that they do not include the listed
equities presented in Note 17. These listed equities are
presented under other current financial assets of the
balance sheet. The Group has adjusted the statement
of cash flows of the comparison year retrospectively
to reflect the new presentation method. This change
in presentation method has had no significant effect
on cash and cash equivalents to be included in the
consolidated statement of cash flows.
The transaction date is generally used when
recognizing financial instruments. Financial assets are
removed from the balance sheet when the Group has
lost the contractual right to cash flows or when it has
transferred substantially all the risks and rewards to an
outside party.
Financial Liabilities and
Borrowing Costs
Financial liabilities are initially recognized at fair value.
Derivative instruments used to hedge against changes
in financial liabilities are recognized at fair value through
profit or loss. All other financial liabilities are measured
at amortized cost after their initial recognition.
Financial liabilities are included in non-current
and current liabilities. Financial liabilities are classified
as current if the Group has no unconditional right to
postpone repayment of the debt for at least 12 months
from the ending date of the reporting period.
Expenses arising from interest-bearing liabilities
are recognized as liabilities during the financial period
during which they arose.
Derivative Contracts and Hedge
Accounting
In earlier financial years, the Group applied hedge
accounting to a net investment in a foreign operation.
During 2009, the Group hedged against a weakening of
the Swedish krona by using forward exchange agree-
ments and currency options. The effective portion of
the change in value of the hedging forward exchange
agreements and options, i.e. the change in spot value,
is recognized in other items of comprehensive income,
and the interest rate difference and ineffective portion
of the change in value is recognized in financial items in
the income statement.
On the date of the balance sheet for the financial
year or the comparison year, the Group had no open
derivative contracts to which the Group had applied
hedge accounting.
Derivative contracts are originally recognized at
fair value at the date on which the Group became a
party to the contract, and they are still measured later
at fair value. Gains and losses arising from measure-
ment at fair value are accounted for as determined by
the purpose of the derivative contracts.
The profit impacts of the value changes of those
derivative contracts to which hedge accounting has
been applied and which are effective hedges are recog-
nized together with the hedged item.
The Group documented the hedge account-
ing at the beginning of the relationship between the
hedged item and the hedging instrument, as well as