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Financing income and expenses
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Financing income includes income from interest on amounts invested and gains from exchange rate differences. Interest income is recognized as accrued, using the effective interest method.
Financing expenses include interest on loans received, commitment fees on borrowings, and changes in the fair value of derivatives financial instruments presented at fair value through profit or loss, and exchange rate losses. Borrowing costs, which are not capitalized, are recorded in the income statement using the effective interest method.
In the statements of cash flows, interest received is presented as part of cash flows from investing activities. Dividends received are presented as part of cash flows from operating activities. Interest paid and dividends paid are presented as part of cash flows from financing activities. Accordingly, financing costs that were capitalized to qualifying assets are presented together with interest paid as part of cash flows from financing activities. Gains and losses from exchange rate differences and gains and losses from derivative financial instruments are reported on a net basis as financing income or expenses, based on the fluctuations on the rate of exchange and their position (net gain or loss).
The Group’s finance income and finance costs include:
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The net gain or loss on the disposal of available-for-sale financial assets;
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The net gain or loss on financial assets at fair value through profit or loss;
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The foreign currency gain or loss on financial assets and financial liabilities;
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The fair value loss on contingent consideration classified as financial liability;
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Impairment losses recognized on financial assets (other than trade receivables);
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The net gain or loss on hedging instruments that are recognized in profit or loss; and
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The reclassification of net gains previously recognized in OCI.
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Interest income or expense is recognized using the effective interest method.
