Audi 2010 Annual Report Download - page 204

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INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
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.
IMPAIRMENT TESTS
Fixed assets are tested regularly for impairment as of the balance sheet date. Impairment testing
of goodwill and intangible assets with a non-determined useful life is generally carried out in
the Audi Group on the basis of the useful value of the Group’s automotive business as a cash
flow-generating unit. The current planning prepared by management provides the basis for this
process. As a general rule the planning period covers a period of five years. Plausible assump-
tions about future development are made for the subsequent years. The planning premises are
in each case adjusted in line with current findings. Appropriate assumptions based on macro-
economic trends and historical developments are taken into account. Cash flows are generally
calculated on the basis of the expected growth rates in the automotive markets concerned.
When calculating useful value as part of goodwill impairment testing, a country-specific dis-
counting rate of 5.5 percent before taxes is applied.
Impairment tests are carried out for development activities, acquired property rights, and prop-
erty, plant and equipment on the basis of expected product life cycles, the respective revenue
and cost situation, current market expectations and currency-specific factors. Expected future
cash flows to other intangible assets and fixed tangible assets are discounted with country-
specific discount rates that adequately reflect the risk and amount to 6.4 percent before tax.
Impairment losses pursuant to IAS 36 are recognized where the recoverable amount, i.e. the
higher amount from either the use or disposal of the asset in question, has declined below its
carrying amount. If necessary, an impairment loss resulting from this test is recognized.
FINANCIAL INSTRUMENTS
Financial assets and liabilities (financial instruments) are recognized and measured in accordance
with IAS 39.
Pursuant to IAS 39, financial assets are divided into the following categories based on the purpose
for which they were acquired:
– financial assets measured at fair value through profit or loss,
– loans and receivables,
– held-to-maturity investments,
– available-for-sale financial assets.
The Audi Group does not have any financial assets that fall into the category of “held-to-maturity
investments.”
Financial liabilities are classed as follows depending on the reasons for their acquisition:
– financial liabilities measured at fair value through profit or loss,
– financial liabilities measured at amortized cost.
Assignment to a category depends on the purpose for which the financial instruments were
acquired and is reviewed at the end of each reporting period.