Audi 2011 Annual Report Download - page 213

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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 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
parties 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 1.8 (2.1) percent was applied in Germany.
LIABILITIES
Non-current liabilities are reported in the Balance Sheet at amortized cost. Any differences
between the historical costs and the repayment value are taken into account using the effec-
tive interest method.
Liabilities from financial lease agreements are reported in the Balance Sheet at the present
value of the leasing installments.
Current liabilities are recognized at the repayment value or settlement amounts.
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 disclosures with regard to contingent obligations and liabilities for
the reporting period. The assumptions and estimates relate principally to the following con-
tents:
Impairment testing of non-financial assets (particularly goodwill, brand names and capitalized
development costs) and of investments accounted for using the equity method or at the cost of
purchase requires that assumptions be made with regard to future cash flows during the planning