Audi 2012 Annual Report Download - page 221

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OTHER FINANCIAL ASSETS AND OTHER RECEIVABLES
Financial assets (except for derivatives) and other receivables are recognized at amortized cost.
Provision is made for discernible non-recurring risks and general credit risks in the form of corre-
sponding value adjustments.
DEFERRED TAX
Pursuant to IAS 12, deferred tax is determined according to the liability method. This method
specifies that tax deferrals are to be created for all temporary differences between the tax base
of assets and liabilities and their carrying amounts in the Consolidated Balance Sheet (tempo-
rary concept). Deferred tax assets relating to carryforward of unused tax losses must also be
recognized.
Deferrals amounting to the anticipated tax burden or tax relief in subsequent fiscal years are
created on the basis of the anticipated tax rate at the time of realization. In accordance with
IAS 12, the tax consequences of distributions of profit are not recognized until the resolution
on the appropriation of profits is adopted.
Deferred tax assets include future tax relief resulting from temporary differences between the
carrying amounts in the Consolidated Balance Sheet and the valuations in the Balance Sheet for
tax purposes. Deferred tax assets relating to carryforward of unused tax losses that can be real-
ized in the future and deferred tax assets from tax relief are also recognized.
Deferred tax assets and deferred tax liabilities are netted if the tax creditors and maturities are
identical.
Pursuant to IAS 1, deferred tax is reported as non-current.
The carrying amount is reduced for deferred tax assets that are unlikely to be realized.
INVENTORIES
Raw materials and supplies are measured at the lower of average cost of acquisition or net real-
izable value. Other costs of purchase and purchase cost reductions are taken into account as
appropriate.
Work in progress and finished goods are valued at the lower of cost of conversion or net real-
izable value. Cost of conversion includes direct materials and direct productive wages, as well as
a directly attributable portion of the necessary indirect materials and indirect labor costs, sched-
uled production-related depreciation, and expenses attributable to the products from the sched-
uled amortization of capitalized production development costs. Distribution costs, admini-
strative expenses and interest on borrowings are not capitalized.
Merchandise is valued at the lower of cost of purchase or net realizable value.
Provision is made for all discernible storage and inventory risks in the form of appropriate reduc-
tions in the carrying amounts. Individual adjustments are made on all inventories as soon as the
probable proceeds realizable from their sale or use are lower than the carrying amounts of the
inventories. The net realizable value is deemed to be the estimated proceeds of sale less the
estimated costs incurred up until the sale.
Current leased assets comprise leased vehicles with an operating lease of up to one year and
vehicles which are subject to a buy-back obligation within one year (owing to buy-back agree-
ments). These vehicles are capitalized at cost of sales and valued in accordance with the ex-
pected loss of value and likely useful life. Based on local factors and historical values from used
car marketing, updated internal and external information is incorporated into the measurement
on an ongoing basis.