Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Deferred income tax is provided, using the liability method,
on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes. These temporary differences arise primarily on
depreciation of tangible fixed assets, revaluation of certain
financial assets and liabilities (including derivatives), employee
benefits, loan impairment allowances and other impairments,
tax losses and fair value adjustments to net assets acquired
in business combinations. Deferred income tax assets and
liabilities are measured at the tax rates that have been enacted
or substantively enacted as at the reporting date.
Deferred tax assets are recognised to the extent that 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.
Taxes on profit are calculated in accordance with the tax
legislation ofthe relevant jurisdictions in which Rabobank
operates and are recognised as an expense in the period in
which the profit is realised. The tax effects of loss carryforwards
are recognised as an asset if it is probable that future taxable
profits will be available against which the losses can be utilised.
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 ofthe 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, theTrust 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 ofthe related debt instrument.
The guarantees are initially recognised at fair value and
subsequently measured at the higher ofthe discounted best
estimate ofthe 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 differfrom 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.
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
ofthe business combination plus any direct costs of
acquisition. Goodwill represents the difference between the
cost ofthe 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 ofthe identifiable net assets ofthe
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.
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