Audi 2015 Annual Report Download - page 232

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
RECOGNITION AND MEASUREMENT PRINCIPLES
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RECOGNITION AND
MEASUREMENT PRINCIPLES
/RECOGNITION OF INCOME AND EXPENSES
Revenue, interest income and other operating income are
always recorded when the services are rendered or the goods
or products are delivered, i.e. when the risk and reward is
transferred to the customer. Revenue is reported after the
deduction of any discounts.
No revenue is initially realized from the sale of vehicles subject
to buy-back agreements. The difference between the selling
price and the expected buy-back price is recognized on a
straight-line basis over the period between sale and buy-back.
Vehicles that are still included in the accounts are reported
under inventories.
Where additional services have been contractually agreed with
the customer in addition to the sale of a vehicle, such as warranty
extensions, mobile services or the completion of maintenance
work over a fixed period, the related revenues and expenses
are recorded in the Income Statement in accordance with the
provisions of IAS 18 governing arrangements with multiple
deliverables based on the economic content of the individual
contractual components (partial services).
Operating expenses are recognized in profit or loss when the
service is used or at the time they are economically incurred.
/INTANGIBLE ASSETS
Intangible assets acquired for consideration are recognized at
their cost of purchase, taking into account ancillary costs and
cost reductions, and are amortized on a scheduled straight-line
basis over their useful life.
Concessions, rights and licenses relate to purchased software,
rights of use and subsidies paid.
Goodwill from a business combination has an indefinite useful
life and is subject to regular impairment testing.
Brand names from business combinations generally have an
indefinite useful life and are therefore not amortized. An in-
definite useful life frequently arises from the continued use
and maintenance of a brand. Brand names are tested regularly
for impairment.
Research costs are treated as current expenses in accordance
with IAS 38. The development expenditure for products going
into series production is recognized as an intangible asset,
provided that the sale of these products is likely to bring eco-
nomic benefit to the Audi Group. If the conditions stated in
IAS 38 for capitalization are not met, the costs are expensed in
the Income Statement in the year in which they occur.
Capitalized development costs encompass all direct and indirect
costs that can be directly allocated to the development process.
Capitalized development costs are amortized on a straight-line
basis from the start of production over the anticipated model
life of the developed products.
Depreciation, allocated to the corresponding functional areas,
is primarily based on the following useful lives, which are
reassessed yearly:
Useful life
Concessions, industrial property rights and similar
rights and assets 3–15 years
of which software 3 years
of which customer base 2–8 years
Capitalized development costs 4-9 years
/PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are measured at cost of pur-
chase or construction, with straight-line depreciation applied
pro rata temporis over the expected useful life.
The costs of purchase include the purchase price, ancillary
costs and cost reductions.
In the case of self-constructed fixed assets, the cost of con-
struction includes both the directly attributable material and
labor costs as well as indirect material and indirect labor costs
that must be capitalized, including pro rata depreciation.