Audi 2013 Annual Report Download - page 237

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RECOGNITION AND MEASUREMENT PRINCIPLES
CONSOLIDATED FINANCIAL STATEMENTS
234
B
Assignment to one of these categories depends on the pur-
pose for which the financial instruments were acquired and is
reviewed at the end of each reporting period.
The Audi Group does not make use of the fair value option, i.e.
choosing to measure certain assets and liabilities at fair value
through profit or loss.
For purchases and sales in the customary manner, recognition
takes place using settlement date accounting (in other words,
on the day on which an asset is delivered).
Initial measurement of financial assets and liabilities is carried
out at fair value.
Subsequent measurement is dependent on the category
assigned in accordance with IAS 39 and is carried out either
at amortized cost or at fair value.
The amortized cost of a financial asset or financial liability, using
the effective interest method, is the amount at which a finan-
cial instrument was measured at initial recognition minus any
principal repayments, impairment losses or uncollectible debts.
In the case of current financial assets and liabilities, the amor-
tized 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 rewards
associated with their title.
With regard to factoring in the Audi Group, essentially all risks
and rewards are transferred.
Financial assets and liabilities include both non-derivative and
derivative claims or commitments, as detailed below.
Financial assets and liabilities are only offset if offsetting the
amounts is legally enforceable at the current time and if there
is an actual intention to offset.
// 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:
>borrowings,
>trade receivables and payables,
>other current assets and liabilities,
>financial liabilities,
>cash and cash equivalents.
Assets and liabilities in foreign currencies are measured at the
relevant closing rates.
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 a remaining term of more than one
year, fair values are determined by discounting future cash flows
at market rates. Recognizable credit risks associated with “Loans
and receivables” are accounted for by carrying out specific allow-
ances. These are entered in the amount of the incurred loss for
significant individual receivables using benchmarks applied
uniformly 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 open-
ing 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 categories. 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 gains or losses realized through disposal.