Basic HTML Version
49
Financial statements 2011
ponent of the change in their fair value. Non-monetary
items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the
fair value is determined.
Monetary items, which include all other assets and
liabilities expressed in a currency other than EUR are
reported using the closing exchange rate prevailing at
the reporting date of the financial statements, as issued
by the European Central Bank. Exchange differences
are recognised in the profit or loss in the year in which
they arise.
Income and charges in foreign currencies are translated
into EUR at the exchange rate prevailing at the date of
the transaction.
2.2 Cash and cash equivalents
Cash and cash equivalents comprise short term, highly liq-
uid securities and interest-earnings deposits with original
maturities of three months or less.
2.3 Investments
2.3.1 Classification and Measurement
Classification
Except for investment in joint ventures (see note 2.3.4),
the Fund classifies its investments in the Available-For-Sale
category (hereafter “AFS”). The classification of the invest-
ments is determined at initial recognition.
Initial recognition and derecognition
Purchases and sales are initially recognised on trade
date. They are initially recognised at fair value plus trans-
action costs. Fair value consideration is explained in the
section below.
Financial assets are derecognised when the right to re-
ceive cash flows from the financial assets has expired or
when EIF has substantially transferred all risks and rewards
of ownership.
ognised in the period in which the estimates are revised
and in any future periods affected.
Information about significant areas of estimation uncer-
tainty and critical judgments in applying accounting poli-
cies that have the most significant effect on the amounts
recognised in the financial statements are described in
notes 2.3 and 3.
Judgments and estimates are principally made in the fol-
lowing areas:
■
Impairment of available-for-sale equity and debt in-
vestments; and specifically, as disclosed in note 2.3.1,
3.5.1.B and 4.2, the non- impairment of sovereign
guaranteed bond holdings;
■
Determination of fair values of equity investments;
■
Determination of provisions and liabilities for financial
guarantees;
■
Actuaries’ assumptions related to the measurement of
pension liabilities and post-retirement benefits.
2.1.4 Changes in accounting policies and presentation
The accounting policies adopted have been applied con-
sistently with those used in the previous year.
The Fund has adopted the new and amended IFRS and
IFRIC interpretation during the year. Adoption of these
revised standards and interpretations did not have any ef-
fect on the financial performance or position of the Fund.
They did however give rise to additional disclosures.
2.1.5 Foreign currency translation
The Euro (EUR) is the functional and presentation currency.
Depending on the classification of a non-monetary finan-
cial asset, exchange differences are either recognised in
the profit or loss or within equity.
Non-monetary items are reported using the exchange rate
at the date of the transaction (historical cost). Exchange
differences on non-monetary financial assets are a com-