Audi 2015 Annual Report Download - page 261

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
>> 261
Around 99.55 percent of the subscribed capital is held by
Volkswagen AG, Wolfsburg, with which a control and profit
transfer agreement exists.
In the 2015 fiscal year, equity rose by 13.4 percent compared
with the prior year. This is primarily due to the transfer to
retained earnings and a cash injection to the capital reserve
made by Volkswagen AG.
35 / ADDITIONAL DISCLOSURES ON FINANCIAL
INSTRUMENTS IN THE BALANCE SHEET
35.1 / FINANCIAL INSTRUMENTS MEASURED AT FAIR
VALUE
Measurement of financial instruments at fair value is based on
a three-level hierarchy and on the proximity of the measurement
factors used to an active market. An active market is one in
which homogeneous products are traded, where willing buyers
and sellers can be found for them at all times, and where their
prices are publicly available.
Level 1 of the fair value hierarchy involves the measurement of
financial instruments, such as securities, listed on active markets.
Level 2 involves the measurement of financial instruments
such as derivatives, where the fair value is calculated using
measurement processes based on observable market data.
Particular use is made of exchange rates, interest rates and
commodity prices, which can be observed on the correspond-
ing markets and are acquired via ratings agencies.
Within the Audi Group, level 3 mainly covers residual value
hedging arrangements with the retail trade. The input factors
for measuring the future development of used car prices can-
not be observed on active markets; they are forecast by various
independent institutions. The residual value hedging model is
explained in Note 36.4, “Market risks.”
Furthermore, non-current commodity futures are also meas-
ured according to level 3, as the long-term nature of the con-
tracts means that the key parameters for their measurement
need to be extrapolated. The extrapolation for the different
commodities is carried out on the basis of observable input
factors, acquired via ratings agencies. Rights to acquire shares
in companies are also assigned to fair value level 3, as there
are no available input factors for measurement derived from
active markets. For the purposes of measuring equity instru-
ments, particular use is made of the respective company plans
and the specific discounting rates.