1.Insurance and reinsurance undertakings shall not value financial assets or financial liabilities at cost or amortized cost.
By way of derogation from the first subparagraph, insurance and reinsurance undertakings that are classified as small and non-complex undertakings may value short-term deposits with maturities of less than 1 year at cost or amortised cost provided that the use of such valuation methods meets one of the following conditions:
(a)it does not introduce material errors in the valuation of such deposits;
(b)it leads to a value of short-term deposits that is lower than the value that would otherwise be calculated without using cost or amortised cost.
2.Insurance and reinsurance undertakings shall not apply valuation models that value at the lower of the carrying amount and fair value less costs to sell.
3.Insurance and reinsurance undertakings shall not value property, investment property, plant and equipment with cost models where the asset value is determined as cost less depreciation and impairment.
4.Insurance and reinsurance undertakings which are lessees in a financial lease or lessors shall comply with all of the following when valuing assets and liabilities in a lease arrangement:
(a)lease assets shall be valued at fair value;
(b)for the purposes of determining the present value of the minimum lease payments market consistent inputs shall be used and no subsequent adjustments to take account of the own credit standing of the undertaking shall be made;
(c)valuation at depreciated cost shall not be applied.
5.Insurance and reinsurance undertakings shall adjust the net realisable value for inventories by the estimated cost of completion and the estimated costs necessary to make the sale where those costs are material. Those costs shall be considered to be material where their non-inclusion could influence the decision-making or the judgement of the users of the balance sheet, including the supervisory authorities. Valuation at cost shall not be applied.
6.Insurance and reinsurance undertakings shall not value non-monetary grants at a nominal amount.
7.When valuing biological assets, insurance and reinsurance undertakings shall adjust the value by adding the estimated costs to sell if the estimated costs to sell are material.