Audi 2012 Annual Report Download - page 217

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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 installments and
rents are expensed directly in the Income Statement.
LEASING AND RENTAL ASSETS
Vehicles leased by Audi Group companies, in the case of operating lease agreements, are capital-
ized at cost of sales and depreciated to the calculated residual value on a straight-line basis over
the contractual term. 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 external information on residual value developments is incorporated into
the residual value forecasts on an ongoing basis.
INVESTMENT PROPERTY
Land or buildings held with the intention of generating rental income (investment property) are
reported in the Balance Sheet at amortized cost. The amortization periods applied are as a gen-
eral rule those applied to property, plant and equipment used by the Group itself. The fair values
calculated on the basis of recognized measurement methods are also to be stated in the case of
measurement at amortized costs.
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 fixed assets
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 gen-
erally carried out in the Audi Group on the basis of the value in use of the Group’s automotive and
motorcycles business as cash generating units. 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 assumptions about future development are made for the subsequent years. The
planning premises are in each case adjusted in line with current findings. Appropriate assump-
tions based on macroeconomic trends and historical developments are taken into account. When
testing the goodwill in the two cash-generating units for impairment, the value in use is deter-
mined using the following average costs of capital (WACC):
% 2012 2011
Automotive segment 5.6 6.0
Motorcycles segment 7.8 –