2.20 Investment Properties
2.21 Other Assets
About this
Report
Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
Property
- Land Not depreciated
-Buildings 25-40 years
Equipment
- Computer equipment 1 - 5 years
- Other equipment and vehicles 3 - 8 years
An annual assessment is made as to whether there are indications
of impairment of property and equipment. If the carrying amount
of an asset exceeds its estimated recoverable amount, the
carrying amount is written down to the recoverable amount.
Impairment losses and impairment reversals are included under
'Other administrative expenses'in the statement of income. Gains
and losses on the disposal of property and equipment are
determined on the basis of their carrying amounts and are
recognized in operating results.
Repair and maintenance work is charged to the statement of
income at the time the costs are incurred. Expenditures to extend
the economic life or increase the economic value of land and
buildings as compared with their original economic value are
capitalized and subsequently depreciated.
Investment properties, primarily office buildings, are held for
their long-term rental income and are not used by Rabobank or
its subsidiaries. Investment properties are recognized as long-
term investments and included in the statement of financial
position at cost net of accumulated depreciation and
impairment. Investment properties are depreciated on a straight-
line basis to their residual values over an estimated useful life of
forty years.
Structured Inventory Products
Rabobank offers several products that relate to financing
commodities. Some of these products are recognized as loans
with commodities as collateral, others as loans with embedded
derivatives and others as commodities.The classification is mainly
dependent on the transfer of risk and rewards of the commodity
from the client to Rabobank.
Building Sites
Building sites are carried at cost, including allocated interest and
additional expenses for purchasing the sites and making them
ready for construction or, if lower, the net realizable value.
Interest is not recognized in the statement offinancial position for
land which has not been zoned for a particular purpose if there
is no certainty that the land will be built on. Possible decreases
in value as a result of future change of designated use of the
relevant land are not included in the cost of land, but are included
in the determination of the net realizable value.
The net realizable value of all building sites is reviewed at least
once a year or earlier, in case of any indications of impairment. The
net realizable value for building sites is the direct realizable value
or, if higher, the indirect realizable value. The direct realizable
value is the estimated value upon sale less the estimated costs for
achieving the sale. The indirect realizable 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 realize the sale. The calculation of the
indirect realizable value is based on an analysis of scenarios that
includes as many site-specific aspects and company-specific
parameters and conditions as possible. A downward revaluation
is recognized if the carrying value exceeds the realizable value.
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
realizable value. Revenues from projects for the construction of
real estate are recognized when the related performance
obligations are satisfied. Expected losses on projects are
immediately deducted from the work in progress. If Rabobank
transfers (parts of) a project to a customer before the customer
pays instalments, Rabobank presents a contract asset. If a
customer pays instalments, or Rabobank has a right to
instalments that is unconditional, before Rabobank transfers
(parts of) a project to a customer, Rabobank presents a contract
liability.
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 realizable value of the work in progress is
estimated; in most cases this is done by means of an internal or
external appraisal. The indirect realizable 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 realize the sale. A downward value
adjustment is recognized if the carrying value exceeds the
expected indirect realizable 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 realizable value. The
net realizable value offinished properties is reviewed at least once
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