Management judgments in the application of accounting policies

Management judgments are required in the application of accounting policies. In particular, this pertains to the following items:

• With regard to certain contracts a decision must be made as to whether they are to be treated as derivatives or as so-called own-use contracts, and be accounted for as executory contracts.
• Financial assets must be allocated to the categories “held to maturity investments”, “loans and receivables”, “financial assets available for sale”, and “financial assets at fair value through profit or loss”.
• With regard to “financial assets available for sale” a decision must be made as to if and when reductions in value are to be recognized as impairments with an impact on income.
• With regard to assets held for sale, it must be determined if they can be sold in their current condition and if the sale of such is highly probable. If both conditions apply, the assets and any related liabilities must be reported and measured as “Assets held for sale” or “Liabilities held for sale”, respectively.

The explanation of the accounting policies contains a description of the decisions taken by the RWE Group with regard to these items.