Page 64 - InterEnergo - Annual Report 2020

Interenergo Accounting report Interenergo
• an estimate of the costs that the lessee will have while dismantling or removing the leased asset,
rebuilding the leased location or returning the leased asset to the condition as required by the lease
terms, unless such occurred during the production of inventories.
The right of use the asset is subsequently reduced by accrued depreciation. Depreciation of leased property,
plant and equipment must be in line with the depreciation of other similar property, plant and equipment. If
there is no reasonable assurance that the lessee will acquire ownership until the end of the lease term, such
property, plant and equipment will be fully depreciated, either during the lease term or during its useful life,
whichever is shorter.
At the date of the lease’s start, the Company measures the lease liability at the present value of the rents
not yet paid at that date. While calculating the present value of rents, the discount rate on the lease is the
associated interest rate, if it can be determined, otherwise the assumed borrowing rate to be paid by the
lessee. Leases recorded at their starting date when measuring liabilities from the lease that are not paid yet
include following payments of the right of use the leased asset during the lease period:
• fixed rents less receivables for lease-related incentives;
• variable rents, which depend on the index or rate and are initially measured with the index or rate that is
applicable at the date the lease;
• amounts expected to be paid by the lessee based on guarantee for the residual value;
• the price of the purchase option if it is fairly certain that the lessee will exercise that option, and
• payment of fines for terminating the lease, if the duration of the lease indicates that the lessee will use
the option of terminating the lease.
Upon the date of the lease’s start, the Company measures lease liabilities as follows:
• increases the carrying amount, which reflects the interest on the lease liability;
• decreases the carrying amount, which reflects the payment of rents; and
• remeasures the carrying amount that must reflect new estimates or changes to the lease in terms of
unmodified rents. The Company remeasures the lease liability by discounting the modified rents using
the modified discount rate if the lease term has changed or the estimated option to purchase the leased
asset has changed. In doing so, the Company determines the modified discount rate as the interest rate,
which was adopted for the lease, for the remainder of the lease term. The Company remeasures the lease
liability by discounting the modified rents if the amounts expected to be paid under the residual value
guarantee are changed or future rents are changed as a result of changes in the index or rate, whereby
the Company uses the unmodified discount rate, unless the modified rent is due to a change in variable
interest rates.
Short-term leases and leases, where the leased asset is of minor value, are not recognised as an asset;
instead the Company recognises lease-related rents as expenses on the straight-line basis over the entire
lease term or any other systematic basis. Short-term lease refers to leases of up to 1 year. Low-value lease is
a lease with a value of up to EUR 5,000, taking into account the value of the new leased asset.
Assets representing the right of use is in a lease depreciated from the date of lease’s start until the end of its
useful life or the end of the lease term if it is shorter from the asset’s useful life. Rates ranging from 25% and
50% were used for such assets.
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Accounting report
Investments in subsidiaries
Investments in subsidiaries, disclosed among non-current investments, are valued at cost.
Financial instruments
Trade receivables are recognised upon their accrual. Other financial assets and financial liabilities are recognised
when the Company becomes subject to contractual provisions of the instrument.
Company’s financial instruments comprise:
• financial assets, which comprise non-current and current investments, non-current and current operating
receivables, as well as cash and cash equivalents, and
• financial liabilities, which comprise non-current and current financial liabilities and current operating
liabilities.
Financial instruments are classified in groups in terms of their measurement, namely a) at amortised cost,
b) at fair value through other comprehensive income or c) at fair value through profit or loss based on the
business model for financial asset management and the characteristics of the financial asset’s contractual
cash flows. The business model relates to the manner used by the Company to manage financial assets in
order to generate cash flows. The latter indicates that the business model determines whether the cash flows
will arise from contractual cash flows, sale of financial assets or both:
• Financial assets held within a business model whose objective is to hold assets to collect contractual cash
flows, are managed with the purpose to generate cash flows by receiving payments during the financial
instrument’s duration. These financial instruments are measured at amortised cost. These assets are
generally kept until the date of expiry and contractually agreed cash flows are collected until the date
of maturity. Most of financial assets disclosed by the Company are classified within this business model
(i.e. non-current and current investments, non-current and current operating receivables, cash and cash
equivalents).
• Financial assets held within a business model whose objective is achieved by collecting contractual cash
flows and selling financial assets, are managed by the management and considered as essential for
achieving the goal of this business model. These financial instruments are measured at fair value through
other comprehensive income and the Company does not disclose any such assets.
• Financial assets are measured at fair value through profit or loss if they are not part of a business model
whose objective is to hold assets to collect contractual cash flows or a business model whose objective
is achieved by collecting contractual cash flows and selling financial assets, but are classified within a
business model under which a company manages the financial assets in order to generate cash flows
through the sale of assets. This group comprises Company’s derivatives used in its trading activity i.e.
commodities forwards contracts, contracts for cross-border transmission capacities and foreign currency
forward contracts, whose fair value of open transactions is defined on the basis of the valuation model
that is as at the date of the statement of financial position based on publicly available market data on the
values of such instruments.
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