Consolidated Annual Accounts 2017

Atresmedia Corporación de Medios de Comunicación, S.A. 2017 FINANCIAL STATEMENTS 14 Initial measurement- Financial assets are initially measured at the fair value of the consideration given plus directly attributable transaction costs. For equity investments in Group companies that give control over the subsidiary, fees paid to legal advisers and other professional services related to the acquisition of the investment are recognised directly in profit or loss. Subsequent measurement- Loans and receivables, and held-to-maturity investments are subsequently measured at amortised cost. Held-for-trading financial assets are measured at fair value, based on expected results, the estimated dividend payable, the share price and share price volatility, and the risk-free rate at year-end. Any changes in fair value are recognised in profit or loss. Available-for-sale financial assets, corresponding to investments in equity instruments, whose fair value cannot be estimated reliably, are measured at cost less any accumulated impairment losses. Equity investments in group companies and associates are subsequently measured at cost less any accumulated impairment. The impairment loss is measured as the difference between the carrying amount and the recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and the present value of future cash flows from the investment. The investee's equity is taken into consideration, adjusted for any unrealised gains existing at the measurement date (including any goodwill), unless better evidence of the recoverable amount investment is available. The Company tests its financial assets not measured at fair value for impairment at least at the end of each reporting date and whenever there are indications of impairment. Objective evidence of impairment is considered to exist if the recoverable amount of the financial asset is less than its carrying amount. When this occurs, the impairment loss is recognised in the statement of profit or loss. The Company uses the strategic plans of the various businesses to calculate any possible impairment losses and discounts expected future cash flows. The Company prepares the various projections individually, taking into account the expected future cash flows of each cash-generating unit (CGU). In calculating any valuation adjustments required for trade and other receivables, the Company takes into account the date on which the receivables are due to be settled and the debtors’ equity position. The Company derecognises a financial asset when the rights to the cash flows from the financial asset expire or have been transferred and substantially all the risks and rewards of ownership of the financial asset have also been transferred, such as in the case of firm asset sales. However, it does not derecognise financial assets, and recognises a financial liability for an amount equal to the consideration received in transfers of financial assets in which substantially all the risks and rewards of ownership are retained, such as in the case of invoice discounting.