Audi 2013 Annual Report Download - page 233

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GENERAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS
230
B
// PARTICIPATIONS IN ASSOCIATED COMPANIES
As of the balance sheet date, AUDI AG holds a 10 percent share
in FAW-Volkswagen Automotive Company, Ltd. Through its
representation in this company’s management and supervisory
board, AUDI AG is in a position to exercise significant influence.
AUDI AG also indirectly holds 30 percent of Volkswagen Group
Services S.A./N.V. Both associated companies are included in
the Consolidated Financial Statements on the basis of the
equity method.
/ CONSOLIDATION PRINCIPLES
The assets and liabilities of the domestic and foreign companies
included in the Consolidated Financial Statements are recognized
in accordance with the standard accounting and measurement
policies of the Audi Group.
In the case of subsidiaries that are being consolidated for the
first time, the assets and liabilities are to be measured at their
fair value at the time of acquisition. Any realized hidden
reserves and expenses are amortized, depreciated or reversed
in accordance with the development of the corresponding
assets and liabilities as part of the subsequent consolidation
process. Where the acquisition values of the participations
exceed the Group share in the equity of the relevant company
as calculated in this manner, goodwill is created. This is then
allocated to identifiable groups of assets (cash-generating
units) which should benefit from the synergies of the acquisi-
tion. Goodwill at this level is regularly subject to impairment
testing as of the balance sheet date with an impairment loss
being recognized if necessary.
Contingent considerations in connection with company acquisi-
tions are measured at their fair value. Subsequent changes to
the value of contingent consideration do not as a rule result in
an adjustment of the measurement at the time of acquisition.
Other costs of purchase that are not associated with the pro-
curement of equity are not added to the purchase price but are
immediately recognized as an expense.
Within the Audi Group, the predecessor method is applied in
relation to common control transactions. Under this method,
the assets and liabilities of the acquired company or business
operations are measured at the gross carrying amounts of the
previous parent company. The predecessor method thus means
that no adjustment to the fair value of the acquired assets and
liabilities is performed at the time of acquisition; any goodwill
arising during initial consolidation is adjusted against equity,
without affecting profit or loss.
The Consolidated Financial Statements also include securities
funds whose assets are attributable in substance to the Group.
Receivables and liabilities between consolidated companies
are netted, and expenses and income eliminated. Interim
profits and losses are eliminated from Group inventories and
fixed assets. Consolidation processes affecting profit or loss
are subject to deferrals of income taxes; deferred tax assets
and liabilities are offset where the term and tax creditor are
the same.
The same accounting policies for determining the pro rata equity
are applied to Audi Group companies accounted for using the
equity method. This is done on the basis of the last set of
audited financial statements of the company in question.
/ FOREIGN CURRENCY TRANSLATION
The currency of the Audi Group is the euro (EUR). Foreign cur-
rency transactions in the separate financial statements of
AUDI AG and the subsidiaries are translated on the basis of the
exchange rates at the time of the transaction in each case.
Monetary items in foreign currencies are translated at the
exchange rate applicable on the balance sheet date. Exchange
differences are recognized in the income statements of the
respective Group companies.
The foreign companies belonging to the Audi Group are independ-
ent entities and prepare their financial statements in their local
currency. The only exceptions are AUDI HUNGARIA SERVICES Zrt.,
AUDI HUNGARIA MOTOR Kft., AUDI VOLKSWAGEN MIDDLE EAST
FZE and AUDI MÉXICO S.A. de C.V., which prepare their annual
financial statements in euros or U.S. dollars rather than in local
currency. The concept of the “functional currency” is applied
when translating financial statements prepared in a foreign
currency. Assets and liabilities, with the exception of equity, are
translated at the closing rate. The effects of foreign currency
translation on equity are reported in the reserve for currency
translation differences with no effect on profit or loss. The items
in the Income Statement are translated using weighted average
monthly rates. Currency translation variances arising from the
differing exchange rates used in the Balance Sheet and Income
Statement are recognized in equity, without affecting profit or
loss, until the disposal of the subsidiary.