Audi 2009 Annual Report Download - page 195

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FOREIGN CURRENCY TRANSLATION
The currency of the Audi Group is the euro (EUR).
Foreign currency transactions in the individual financial statements of AUDI AG and the subsidi-
aries are translated on the basis of the exchange rates at the time of the transaction. Monetary
items in foreign currencies are translated at the exchange rate applicable on the balance sheet
date. Exchange differences are recognized in the current-period income statements of the re-
spective Group companies.
The foreign companies belonging to the Audi Group are foreign entities and prepare their finan-
cial statements in their local currency. The only exceptions are AUDI HUNGARIA MOTOR Kft.
(Győr, Hungary) and Audi Volkswagen Middle East FZE (Dubai, United Arab Emirates), which
prepare their annual financial statements in euros and U.S. dollars respectively rather than in
local currency. The concept of the “functional currency” is applied when translating financial
statements prepared in foreign currency. Assets and liabilities, with the exception of equity, are
translated at the year-end exchange rate. The effects of foreign currency translation on equity
are reported in the currency exchange reserve with no effect on income. The items in the Income
Statement are translated using weighted average monthly rates. Currency translation variances
arising from the differing exchange rates used in the Balance Sheet and Income Statement are
recognized in equity, without affecting income.
The development of the exchange rates serving as the basis for currency translation is shown
below:
1 EUR in foreign currency Dec. 31, 2009 Dec. 31, 2008 2009 2008
Year-end exchange rate Average exchange rate
Australia AUD 1.6008 2.0274 1.7727 1.7416
Brazil BRL 2.5113 3.2436 2.7674 2.6743
Japan JPY 133.1600 126.1400 130.3366 152.4541
Canada CAD 1.5128 1.6998 1.5850 1.5594
South Korea KRW 1,666.9700 1,839.1300 1,772.9039 1,606.0872
USA USD 1.4406 1.3917 1.3948 1.4710
People’s Republic of China CNY 9.8350 9.4956 9.5277 10.2236
As all consolidated subsidiaries have their registered offices in countries in which there is cur-
rently no hyperinflation, IAS 29 does not apply.
RECOGNITION AND MEASUREMENT PRINCIPLES
RECOGNITION OF INCOME AND EXPENSES
Revenue, interest income and other operating income are always recorded when the services are
rendered or the goods or products are delivered, in other words transfer of risk and reward to
the customer.
Proceeds from the sale of vehicles for which buy-back agreements exist are not realized immedi-
ately, but on a straight-line basis over the period between sale and buy-back, on the basis of the
difference between the selling price and the anticipated buy-back price. These vehicles are re-
ported under inventories.
Operating expenses are recognized as income when the service is used or at the time they are
economically incurred.
Where additional services have been contractually agreed with the customer in addition to the
sale of a vehicle, such as warranty extensions or the completion of maintenance work over a
fixed period, the related revenues and expenses are recorded in the Income Statement in accor-
dance with the provisions of IAS 18 governing arrangements with multiple deliverables based
on the economic content of the individual contractual components (partial services).