Audi 2012 Annual Report Download - page 219

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In the case of current financial assets and liabilities, the amortized cost basically corresponds to
the nominal value or the repayment value.
Fair value generally corresponds to the market value or trading price. If no active market exists,
fair value is determined using investment mathematics methods, for example by discounting
future cash flows at the market rate or applying established option pricing models.
Financial instruments are abandoned if the rights to payments from the investment have expired
or been transferred and the Audi Group has substantially transferred all risks and opportunities
associated with their title.
In the case of factoring in the Audi Group, all of the essential opportunities and risks are trans-
ferred, leaving no continuing involvement.
Financial assets and liabilities include both non-derivative and derivative claims or commit-
ments, as detailed below.
Non-derivative financial instruments
The “Loans and receivables” and “Financial liabilities measured at amortized cost” categories
include non-derivative financial instruments measured at amortized cost. These include,
in particular:
– loans advanced,
– trade receivables and payables,
– other current assets and liabilities,
– financial liabilities,
– cash and cash equivalents.
Assets and liabilities in foreign currency are measured at the exchange rate on the reporting date.
In the case of current items, the fair values to be additionally indicated in the Notes correspond
to the amortized cost. For assets and liabilities with more than one year to maturity, fair values
are determined by discounting future cash flows at market rates. Recognizable credit risks asso-
ciated with “Loans and receivables” are accounted for by carrying out specific value adjustments.
These are entered in the amount of the incurred loss for significant individual receivables (for
example, claims arising from dealer financing with key accounts) using benchmarks applied uni-
formly across the Group. Potential impairment is assumed in the event of various circumstances
such as a payment delay of a specific duration, introduction of coercive measures, the threat of
insolvency or excessive debts, an application for or the opening of insolvency proceedings or the
failure of restructuring measures. Impairment losses on receivables are regularly posted to
separate impairment accounts.
The item “Available-for-sale financial assets” includes non-derivative financial instruments that
are either specifically allocated to this category or cannot be allocated to any of the other cate-
gories. This includes equity instruments, such as equities, and debt instruments, such as interest-
bearing securities. As a general rule, financial instruments that fall into this category are reported
at their fair value. In the case of listed financial instruments – exclusively securities in the case
of the Audi Group – the fair value corresponds to the market value on the balance sheet date.
Fluctuations in value are accounted for within equity in the reserve for the market valuation of
securities, after taking deferred tax into account. Unless there is evidence of lasting impairment,
the financial result includes only capital gains or losses realized through disposal.