Audi 2007 Annual Report Download - page 189

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The depreciation plan is based on the following useful lives, which are reassessed yearly:
Useful life
Buildings 14–33 years
Plant fixtures 10–33 years
Plant and machinery 6–12 years
Furniture and fixtures, including special tools 3–15 years
In accordance with IAS 17, property, plant and equipment used on the basis of lease agree-
ments is recognized in the Balance Sheet if the conditions of a finance lease are met; in
other words if the significant risks and opportunities which result from its use have passed
to the lessee. Recognition is performed at the time of the agreement, at the lower of cost or
the present value of the minimum lease payments. The straight-line depreciation method is
based on the shorter of economic life or the term of the lease contract. The payment obliga-
tions resulting from the future lease installments are recognized as a liability at the present
value of the leasing installments.
Where Group companies have entered into operating leases as the lessee, in other words
if not all risks and opportunities associated with title have passed to them, leasing install-
ments and rents are expensed directly in the Income Statement.
Investment property is measured at amortized cost. Buildings are depreciated on a straight-
line basis over a useful life of 33 years.
Companies in which AUDI AG is directly or indirectly able to exercise significant influence on
financial and operating policy decisions (associated companies) are accounted for using the
equity method. The pro rata equity of these companies is regularly recorded under long-
term investments and the share of earnings recorded as income under the financial result.
Fixed assets are tested regularly for impairment as of the balance sheet date. To test for
impairment, anticipated future cash flows are discounted at risk-appropriate, country-
specific rates of at least 9 percent.
Impairment loss pursuant to IAS 36 is recognized where the recoverable amount from the
use or disposal of the asset in question has declined below its carrying amount.
Within the Audi Group, the value in use of the cash-generating unit in question, deter-
mined according to the entity method, is used in assessing impairment of goodwill. The
planning data are compiled on the basis of available knowledge and are influenced by the
prevailing macroeconomic developments, as well as by past developments. The planning
horizon extends over a period of five years. Plausible assumptions on future developments
are made for subsequent years.
The impairment test for development work recognized as an intangible asset and for
property, plant and equipment is based on current market factors, currency-specific aspects
and the prevailing cost situation, with anticipated future cash flows being discounted at a
risk-appropriate rate of 9 percent before tax.
Investment property
Investments accounted for
using the equity method
Impairment tests