Audi 2009 Annual Report Download - page 201

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Unscheduled reductions for impairment and adjustments to depreciation rates are made to take
account of impairment losses calculated on the basis of impairment testing pursuant to IAS 36.
Based on local factors and historical values from used car marketing, updated internal and ex-
ternal information on residual value developments is incorporated into the residual value fore-
casts on an ongoing basis.
SECURITIES, CASH AND CASH EQUIVALENTS
Securities held as current assets are measured at market value, i.e. at the trading price on the
balance sheet date.
Cash and cash equivalents are stated at their market value, which corresponds to the nominal
value.
PROVISIONS FOR PENSIONS
Actuarial measurement of provisions for pensions is based on the projected unit credit method
for defined retirement benefit plans as specified in IAS 19 (Employee Benefits). This method
takes account of pensions and entitlements to future pensions known at the balance sheet date
as well as anticipated future pay and pension increases.
Actuarial gains and losses are reported in a separate line item within equity, with no effect on
income, after taking deferred tax into account.
OTHER PROVISIONS
In accordance with IAS 37, provisions are recognized if an obligation existing toward third par-
ties is likely to lead to cash outflows and where the amount of the obligation can reliably be
estimated.
Pursuant to IAS 37, the other provisions for all discernible risks and uncertain liabilities are
reported at their probable cost and are not offset against recourse entitlements.
Provisions with over one year to maturity are measured at their discounted settlement value as
of the balance sheet date. Market rates are used as the discount rates. Since the settlement value
pursuant to IAS 37 also includes the cost increases to be taken into account on the balance
sheet date, a nominal interest rate of 3.4 percent was applied in Germany.
MANAGEMENT’S ESTIMATES AND ASSESSMENTS
To some degree, the preparation of the Consolidated Financial Statements entails assumptions
and estimates with regard to the level and disclosure of the recognized assets and liabilities,
income and expenditure, and contingent liabilities for the reporting period.
The assumptions and estimates relate principally to the reporting of intangible assets, the
Group-wide determination of the useful life of property, plant and equipment and investment
property, any impairment of fixed assets and inventories, the collectability of receivables, and
the recognition and measurement of provisions.