Contents Foreword Management report Corporate governance
are recognised as an asset if it is probable that future taxable
profits will be available against which the losses can be utilised.
Deferred tax assets and liabilities are recognised on the
revaluation of available-for-sale financial assets and cash flow
hedges that are taken directly to other comprehensive income.
When realised, they are recognised in the income statement
at the same time as the respective deferred gain or loss
is recognised.
2.25 Deposits from banks, deposits from customers
and debt securities in issue
These borrowings are initially recognised at fair value, being the
issue price less directly allocable and non-recurring transaction
costs, and thereafter at amortised cost including transaction costs.
Own debt instruments that are repurchased are derecognised,
with the difference between the carrying amount and the
consideration paid being recognised in the income statement.
2.26 Rabobank Certificates
The proceeds of the issue of Rabobank Certificates are available
to Rabobank in perpetuity and are subordinate to all liabilities and
to the Trust Preferred Securities and the Capital Securities. As the
payment of distributions is wholly discretionary, the proceeds
received and dividends paid on them are recognised in equity.
2.27 Trust Preferred Securities and Capital Securities
As there is no formal obligation to (re)pay the principal or to pay
a dividend, the Trust Preferred Securities and Capital Securities
are recognised as 'Equity' and dividends paid on these
instruments are recognised directly in equity.
2.28 Financial guarantees
Financial guarantee contracts require the issuer to compensate
the holder for losses incurred when the debtor fails to meet
its obligations under the terms of the related debt instrument.
The guarantees are initially recognised at fair value and
subsequently measured at the higher of the discounted best
estimate of the obligation under the guarantee and the amount
initially recognised less cumulative amortisation.
2.29 Segmented information
A segment is a discrete operating component that is subject
to risks and returns that differ from those of other segments
or operating components and that is viewed and managed as
a separate and discrete component for Rabobank's strategic
and operating management purposes. Rabobank uses the
business segmentation as its primary management and
reporting framework, with the geographic segmentation as its
secondary framework.
Consolidated Financial Statements Company Financial Statements Pillar 3
2.30 Business combinations
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is determined as the
monetary amount (or equivalent) agreed for the acquisition of
the business combination plus any direct costs of acquisition.
Goodwill represents the difference between the cost of
the acquisition and acquirer's share of the fair value of the
Identifiable assets, liabilities and conditional assets and
liabilities acquired. Goodwill is capitalised and recognised
as an intangible asset. The non-controlling interest is also
determined as the fair value or its share of the identifiable net
assets of the company acquired. Direct acquisition costs are
charged directly to the statement of income on acquisition.
2.31 Disposal groups classified as held for sale and
discontinued operations
Assets that have been classified as held for sale are written
down to their fair value, reduced by the estimated costs of
sale, where this is lower than the carrying amount. An asset (or
group of assets) is classified as held for sale when it is very
likely that its economic value will be realised primarily through
sale rather than through continued use, the asset (or group
of assets) is fully available for sale in its current condition,
management has committed itself to a plan to sell the asset,
and the sale is expected to be completed within one year of
its classification as held for sale. If a group of assets classified
as held for sale represents a key business activity or key
geographic region, it is classified as discontinued operations
and recognised outside comprehensive income arising from
continuing operations.
2.32 Cash flow statement
Cash and balances at central banks include cash resources,
money market deposits and deposits at central banks. The cash
flow statement is prepared using the indirect method and
provides details of the source of the cash and balances at
central banks that became available during the year as well
as their application during the year. The net pre-tax cash flow
from operating activities is adjusted for non-cash items in the
statement of income and for non-cash changes in items in the
statement of financial position.
The statement presents separately the cash flows from
operating, investing and financing activities. Cash flows
from operating activities include net changes in loans and
receivables, interbank deposits, deposits from customers
and debt securities in issue. Investment activities include
acquisitions, disposals and repayment of financial investments
and acquisitions and disposals of subsidiaries and property and
equipment. Financing activities include issues and repayments
187 Notes to the consolidated financial statements