Septiembre 2011

Financial instruments

Available-for-sale financial assets: in the case of equity instruments impairment (permanent and
therefore non-reversible) is presumed to exist if the market value of the asset has fallen by more than 40% or if there has been a prolonged fall in market value over a period of 18 months without the value having recovered.
Recognition of dividends from financial assets: the SNCA indicates that if dividends are clearly paid out of pre-acquisition profits, they are not recognised as income and are deducted from the carrying amount of the investment.
The current IFRSs do not establish any such presumption or regulate the length or extent of the drop in market value. IFRSs presume
impairment to exist when there is a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
Dividends in separate financial statements are recognised as income regardless of whether they are paid out of pre-acquisition or post- acquisition profits and their potential impact is taken into account in any impairment analysis.

Income tax

In relation to the estimated time limit for the recovery of tax losses in order to be able to recognise a deferred tax asset, the Spanish Accounting and Audit Institute (ICAC) has stated in response to a request for a ruling that the period for recovery may not exceed ten years in cases in which tax legislation permits tax losses
to be offset over longer periods of time.
IFRSs do not establish any specific time limit except, logically, for the expiry of the related tax losses.

Long-term employee benefit liabilities

Actuarial gains and losses on
long-term defined benefit plans are recognised immediately in the year in which they arise.
These actuarial gains and losses are recognised directly in reserves.
The IAS currently in force provides for the possibility of applying the approach known as the “corridor” whereby a portion of these actuarial gains and losses may be deferred up to certain limits.
However, this corridor will be eliminated when the revision of IAS 19 approved in 2011 comes
into force on 1 January 2013 and, therefore, all actuarial gains and losses will be recognised immediately.
In general, actuarial gains and losses are initially recognised in other comprehensive income and are then transferred to reserves.

Grants

Grants are initially recognised and presented in equity and are
generally recognised as income on a systematic and rational basis.


Grants recognised in profit or loss are presented in the statement of recognised income and expense as transfers to profit or loss from equity.
Grants related to assets may be presented as deferred income or may be deducted in arriving at the carrying amount of the asset and are also recognised as income on a systematic basis.
Under IFRSs grants may not be credited directly to equity.
Grants related to income may be presented in the income statement as income from grants or may be deducted in reporting the related expense.