Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Work in progress
Work in progress concerns sold and unsold residential projects
under construction or in preparation, as well sold and unsold
commercial property projects. Work in progress is carried at
the costs incurred plus allocated interest or, if lower, the net
realisable value. If the project qualifies as an agreement for
the construction of real estate commissioned by a third party,
the result is also recognised in work in progress according
to the stage of completion. Expected losses on projects are
immediately deducted from the work in progress. If the buyer
has no or only limited influence, but the risk is gradually
transferred to the buyer during construction, the result is
also recognised in work in progress according to the stage
of completion. If there is no such gradual transfer of risk, the
result is recognised on the date of transfer to the customer.
Progress instalments invoiced to buyers and principals are
deducted from work in progress in case either the project
qualifies as an agreement for the construction of real estate
commissioned by a third party or, If the buyer has no or only
limited influence, but the risk is gradually transferred to the
buyer during construction. If the balance of a project is negative
(progress instalments invoiced exceed the costs recognised in
the statement of financial position), the balance of that project,
including any provision for the project, is transferred to 'Other
liabilities'.
The carrying amount of unsold work in progress is annually
reviewed for indications of a decline in value. If there is such
an indication, the indirect realisable value of the work in
progress is estimated; in most cases this is done by means of an
internal or external appraisal.The indirect realisable value is the
estimated sale price within the context of normal operations
less the estimated costs of completion and the estimated
costs necessarily incurred to realise the sale. A downward
value adjustment is recognised if the carrying value exceeds
the expected indirect realisable value, to the extent that this
difference must be borne by Rabobank.
Finished properties
Unsold residential properties and commercial developed
in-house are carried at cost or, if lower, the net realisable value.
The net realisable value of finished properties is reviewed at
least once a year or if there are any indications for a decline
in value. For finished properties, the net realisable value is
generally equal to the direct realisable value, which is mostly
determined by means of an internal or external appraisal.
A downward value adjustment is recognised if the carrying
value exceeds the expected direct realisable value, to the extent
that the difference must be borne by Rabobank.
2.20 Leasing
Rabobank as lessee
Rabobank primarily enters into operating leases under which
a considerable portion of the risks and rewards of ownership
are retained by the lessor. Operating lease payments (less any
discounts granted by the lessor) are charged to the statement
of income on a linear basis over the term of the lease.
Rabobank as lessor
Finance leases
A finance lease is recognised as a receivable under'Loans and
advances to banks'or'Loans and advances to customers', as
applicable, at an amount equal to the net investment in the
lease. The net investment in the lease is the present value of
the nominal minimum lease payments and the unguaranteed
residual value. The difference between the gross investment
and the net investment in the lease is recognised as unearned
finance income. Lease income is recognised as interest income
over the term of the 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 write-offs and discounts
granted to lessees) is recognised under'Net income from other
operating activities'on a linear basis over the term of the lease.
2.21 Provisions
Provisions are recognised for obligations (both legal and
constructive) arising as a result of a past event where it is
probable that an outflow of resources will be required to
settle the obligation and a reliable estimate can be made of
the amount of the obligation. If Rabobank expects a provision
to be reimbursed, for example under an insurance policy, the
reimbursement is recognised as a separate asset but only if the
reimbursement is virtually certain. The provisions are carried
at the discounted value of the expected future cash flows.
The additions to and releases of provisions are recognised in the
statement of income under'Other administrative expenses'.
Restructuring
Restructuring provisions comprise payments under redundancy
schemes and other costs directly attributable to restructuring
program mes. These costs are recognised during the period in
which the legal or actual payment obligation arises, a detailed
plan has been prepared for redundancy pay and there are
realistic expectations among the parties concerned that the
reorganisation will be implemented.
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