MTA » Topics » 2.5 Financial assets

This excerpt taken from the MTA 20-F filed May 21, 2009.

2.4.1  Financial assets

        The Group classifies its financial assets in the following categories:

    (a)
    at fair value through profit or loss

    (b)
    loans and receivables

    (c)
    available-for-sale (AFS)

    (d)
    held-to-maturity

        Finance lease receivables and liabilities meet the criteria of a financial instrument, but these are recognized and measured according to IAS 17—Leases.

        The classification depends on the purpose for which the financial asset was acquired. Management determines the classification of financial assets at their initial recognition.

        Regular way purchases and sales of financial assets are recognized on the trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement.

        Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

This excerpt taken from the MTA 20-F filed Jun 17, 2008.

2.4.1  Financial assets

        The Group classifies its financial assets in the following categories:

    (a)
    at fair value through profit or loss

    (b)
    loans and receivables

    (c)
    available-for-sale (AFS)

    (d)
    held-to-maturity

        Finance lease receivables and liabilities meet the criteria of a financial instrument, but these are recognized and measured according to IAS 17—Leases.

        The classification depends on the purpose for which the financial asset was acquired. Management determines the classification of financial assets at their initial recognition.

        Regular way purchases and sales of financial assets are recognized on the trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement.

        Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

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MAGYAR TELEKOM

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

This excerpt taken from the MTA 20-F filed Jun 27, 2007.

2.5 Financial assets

The Group classifies its financial assets in the following categories:

·       at fair value through profit or loss,

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MAGYAR TELEKOM
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

·       loans and receivables, and

·       available for sale (AFS).

The classification depends on the purpose for which the financial asset was acquired. Management determines the classification of financial assets at their initial recognition.

This excerpt taken from the MTA 20-F filed Feb 22, 2007.

(e) Financial assets

The Group classifies its financial assets into the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

(1)   Financial assets at fair value through profit or loss

This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorized as financial assets held for trading as Magyar Telekom does not apply hedge accounting. Assets in this category are classified as current assets if they are either held for trading or are expected to be realized within 12 months of the balance sheet date.

(2)   Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non current assets. Loans and receivables due within 12 months are classified as Trade and other receivables in the balance sheet, while those with a maturity over 12 months are included in Other non current assets.

(3)   Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in Other non current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Magyar Telekom has no financial assets that would be classified in this category.

F-19




MAGYAR TELEKOM
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Regular purchases and sales of investments are recognized on trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the income statement. Investments are derecognized when the rights to receive cash flows from the investments have expired or have been transferred, and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value.

Loans and receivables are carried at amortized cost using the effective interest method. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category, including interest and dividend income, are presented in the income statement within Net financial expenses, in the period in which they arise.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If impairment is established, the loss on financial assets through profit or loss is recognized in Other financial expenses, while impairment loss of Trade and other receivables is charged in the Other operating expenses as Bad debt expense. Recoverable amounts of Trade and other receivables, used as a basis for determining whether impairment has become necessary, are estimated taking into account potential delays and defaults on payments.

Amounts due to, and receivable from, other network operators are shown net where a right of set-off exists and the amounts are settled on a net basis.

The revised interpretation of IAS 39—Financial Instruments—Recognition and Measurement does not consider contracts denominated in a currency that is not the functional currency of either of the contracting parties as a separable host contract and an embedded derivative if the contract currency is widely used in that market. As a result of the change in the interpretation, Magyar Telekom has restated its opening retained earnings to eliminate the carrying amounts of these embedded derivatives previously recognized (HUF 873 million) and the related deferred tax liability (HUF 140 million) in the balance sheet as at December 31, 2004.

This excerpt taken from the MTA 20-F filed May 11, 2005.

(e) Financial assets

        At January 1, 2001 the Group adopted IAS 39 – Financial Instruments – Recognition and Measurement, and classified its financial assets into the following categories: trading, held-to-maturity, available-for-sale and loans receivable.

        Financial assets that are highly liquid and are acquired principally for the purpose of generating profit from short-term fluctuations in price are classified as other financial instruments held for trading or cash and cash equivalents depending on their maturities.

        Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in other non current assets.

        Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale. These are included in other non current assets unless management has the express intention of holding the investment for less than 12 months from the balance sheet date or unless they will need to be sold to raise operating capital, at which time they are transferred to current assets.

        Loans and receivables are created by providing money, goods, or services directly to a debtor, other than those that are originated with the intent to be sold immediately or in the short term.

        Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis.

        Trading and available-for-sale financial assets are carried at fair value, while held-to-maturity investments and loans receivable are carried at amortized cost. Any changes in the carrying values are accounted for in the income statement under the caption "Net financial expenses".

        Trading investments include securities issued by the government, the maturities of which are between three months and one year.

        Regular way purchases and sale of financial assets are recognized and derecognized, as applicable, using settlement date accounting.

        During the period Matáv did not hold any available-for-sale or held-to-maturity type of investments.

        Trade and other receivables are stated at their recoverable amount, after accounting for any impairment losses included in other operating expenses. Recoverable amounts are estimated taking into account potential delays and defaults on payments.

        Amounts due to, and receivable from, other network operators are shown net where a right of set-off exists and the amounts are settled on a net basis.

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