At least once a year the Company verifies the recoverability of the carrying value of intangible assets, tangible assets and investments in subsidiaries and associates in order to determine whether these assets have suffered any loss of value. If there is evidence of such a loss, the carrying value of the asset is reduced to its recoverable value.
The recoverable value of an asset is the higher of fair value less costs to sell and its value in use.
In detail, in valuing the presence of any losses in the value of investments in subsidiaries and associates, since these are investments for which a market value (i.e. fair value less costs to sell) is in some cases unreliable, the recoverable value was defined as its value in use, meaning the present value of estimated cash flows in relation to the expected results of investee companies and to the estimated value of a hypothetical ultimate disposal in line with the terms set out in IAS 28 (paragraph 33).
When at a later date the loss of value ceases to exist or is reduced, the carrying value of the assets is written up to the extent of the new estimate of recoverable value but cannot exceed the value which would have been determined if no impairment loss had been recognized.
The recovery of an impairment loss is immediately posted to the income statement.