Note 1 Accounting policies – continued hips acquired in connection with acquisitions as well as goodwill. The value of customer relationships acquired is measured at cost less accumulated amortisation and impairment charges. The value of customer relationships acquired is amortised over the expected useful life of 5-15 years. Initial recognition of goodwill is at cost in the balance sheet. Subsequent measurement of goodwill is at cost less accumulated impairment charges. Goodwill is not amor- tised. Goodwill is tested for impairment once a year and is written down to its recoverable amount through profit or loss if the carrying amount is higher. The recoverable amount is determined as the present value of the future net cash flows expected to be derived from the activity to which goodwill is related. The determination of cash-generating units follows the management structure and the mana- gement control. Management assesses the lowest level of cash-generating units to which the carrying amount of goodwill may be allocated. The carrying amount of goodwill is allocated to Banking at the acquisition date. Impairment charges for goodwill are not reversed. Owner-occupied property Owner-occupied property is property mainly used by the Group to operate its banking business. Owner-occupied property is recognised on acquisition at cost and subsequently carried at a revalued amount corresponding to the fair value at the date of revaluation less depreciation and impairment charges. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. Any decrease in the carrying amount as a result of the revaluation of owner-occupied property is charged to the income statement except where the decrease reverses previously recognised increases. Any increase as a result of the revaluation of owner-occupied property is recognised in other comprehensive income and transferred to revaluation reserves under equity except where an increase reverses previously recognised impairment charges as regards the property in question. Owner-occupied property is depreci- ated on a straight-line basis over the expected useful life of 50 years taking into account the expected residual value at the expiry of the useful life. As regards ongoing measurement of land and buildings, the value of the individual property is measured on the basis of the return method. The underlying assumptions, return and rate of return are assessed by external valuers. Depreciation and impairment charges are recognised in the income statement under “Depreciation and impairment of property, plant and equipment”. Other property, plant and equipment Other property, plant and equipment consists primarily of IT equipment, furniture and fixtures and leasehold improve- ments and is measured at cost less depreciation and impair- ment charges. Depreciation is provided on a straight-line basis over the expected useful life, typically 3-5 years. Lea- sehold improvements are depreciated over the term of the lease. Depreciation and impairment charges are recognised in the income statement under “Depreciation and impair- ment of property, plant and equipment”. Other assets This item includes assets not recognised under other asset items, eg positive market values of spot transactions and derivatives, cash collateral provided in connection with CSA agreements as well as interest receivable. Dividend Proposed dividend is recognised as a liability at the date of adoption by the AGM. Proposed dividend for the year is recognised as a separate item in equity until adoption. AT1 capital AT1 capital which has no maturity and with voluntary payment of interest and voluntary repayment of principal is recognised in equity. Similarly the interest expense related to the issue is recognised as dividend. Interest is deducted from equity at the time of payment (date of decision). Own shares Consideration paid or received in connection with the Group’s purchase and sale of Sydbank shares is recognised directly in equity. Other liabilities This item includes negative market values of spot transac- tions and derivatives, cash collateral received in connection with CSA agreements, negative portfolios in connection with reverse transactions, interest payable as well as provi- sions for employee benefits. Negative portfolios in connection with reverse transactions arise when the Group resells assets received as collateral in Annual Report 2024 93
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