Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
Rabobank every year assesses whether there are indications of
impairment of tangible fixed assets. If the carrying amount of
an asset exceeds its estimated recoverable amount, the carrying
amount is immediately written down to the recoverable
amount. Impairment losses and reversed impairments of
tangible fixed assets are included in 'Other administrative
expenses' in the statement of income. Gains and losses on the
disposal of tangible fixed assets are determined in proportion
to their carrying amounts and taken into account when
determining the operating result. Repair and maintenance
work is charged to the profit and loss account at the time
the relevant costs are incurred. Expenditures on extending
or increasing the benefits from land and buildings compared
with their original benefits are capitalised and subsequently
depreciated.
2.18 Investment properties
Investment properties, mainly office buildings, are held for their
long-term rental income and are not used by Rabobank or its
subsidiaries. Investment properties are recognised as long-term
investments and included in the statement of financial position
at cost, net of accumulated depreciation and impairment.
Investment properties are depreciated over a term of 40 years.
2.19 Leasing
Rabobank as lessee
Leases relating to property and equipment under which
virtually all risks and benefits of ownership are transferred to
Rabobank are classified as finance leases. Finance leases are
capitalised at the inception of the lease at the fair value of the
leased assets or at the present value of the minimum lease
payments if the present value is lower. Lease payments are
apportioned between the lease liability and the finance charges
so as to achieve a constant rate of interest on the remaining
balance of the liability. The corresponding lease liabilities are
included under 'Other liabilities'after the deduction of finance
charges. The interest components of the finance charges are
charged to the profit and loss account over the term of the
lease. A tangible fixed asset acquired under a lease agreement
is depreciated over the useful life of the asset or, if shorter, the
term ofthe lease.
Leases under which a considerable portion ofthe risks and
benefits of ownership ofthe assets are retained by the lessor are
classified as operating leases. Operating lease payments (less
any discounts by the lessor) are charged to the profit and loss
account on a linear basis over the term ofthe lease.
Rabobank as lessor
Finance leases
If assets are leased under a finance lease, the present value of
the lease payments is recognised as a receivable under 'Loans
and advances to banks'or'Loans and advances to customers'.
The difference between the gross receivable and the present
value ofthe receivable is recognised as unearned finance
income. Lease income is recognised as interest income over
the term ofthe lease using the net investment method, which
results in a constant rate of return on the investment.
Operating leases
Assets leased under operating leases are included in the
statement of financial position under 'property and equipment'.
The assets are depreciated over their expected useful lives
in line with those of comparable items of property and
equipment. Rental income (less discounts granted to lessees
and write-downs) is recognised under'Other results'on a linear
basis over the term ofthe lease.
2.20 Provisions
Provisions are recognised if Rabobank has a present obligation
(legal or constructive) as a result of a past event, if it is probable
that an outflow of resources will be required to settle the
obligation and if a reliable estimate can be made ofthe
amount ofthe obligation. If Rabobank expects a provision to
be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only if the
reimbursement is virtually certain. The provisions are carried at
the discounted value ofthe expected future cash flows.
Restructuring
Restructuring provisions comprise payments under redundancy
schemes and other costs directly attributable to restructuring
program mes. These costs are accounted for during the period in
which a legal or actual payment obligation arises for Rabobank,
a detailed plan has been prepared for redundancy pay, and
there are realistic expectations among the parties concerned
that the reorganisation will be implemented.
Tax and legal issues
The provision for tax and legal issues is based on the best
possible estimates available in the reporting period, taking into
account legal and tax advice. The timing ofthe cash outflow
of these provisions is uncertain because the outcome ofthe
disputes and the time involved are unpredictable.
266 Rabobank Annual Report 2015
