Mercedes 2009 Annual Report Download - page 186

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For the investments in the European Aeronautic Defence and
Space Company EADS N.V. (EADS), Tognum AG (Tognum), Kamaz
OAO (Kamaz) and – until the redemption of the remaining 19.9%
equity interest – Chrysler Holding LLC (Chrysler), the Group’s
proportionate share of the results of operations is included in
Daimler’s consolidated financial statements with a three-month
time lag because the financial statements of those associated
companies are not made available timely to Daimler. Adjust-
ments are made for all significant events or transactions that
occur during the time lag (see also Note 12).
Foreign currency translation. Transactions in foreign currency
are translated at the relevant foreign exchange rates prevailing
at the transaction date. Subsequent gains and losses from the
remeasurement of financial assets and liabilities denominated in
foreign currency are recognized in profit and loss (except for
available-for-sale equity instruments and financial liabilities des-
ignated as a hedge of a net investment in a foreign operation).
The assets and liabilities of foreign companies for which the func-
tional currency is not the euro are translated into euro using
period-end exchange rates. The translation adjustments generat-
ed after the transition to IFRS on January 1, 2005 are recorded
directly in equity. The consolidated statements of income (loss)
and cash flows are translated into euro using average exchange
rates during the respective periods.
The exchange rates of the US dollar, the most significant foreign
currency for Daimler, were as follows:
Accounting policies
Revenue recognition. Revenue from sales of vehicles, service
parts and other related products is recognized when the risks
and rewards of ownership of the goods are transferred to the
customer, the amount of revenue can be estimated reliably
and collectability is reasonably assured. Revenue is recognized
net of discounts, cash sales incentives, customer bonuses and
rebates granted.
Daimler uses price discounts in response to a number of market
and product factors, including pricing actions and incentives
offered by competitors, the amount of excess industry production
capacity, the intensity of market competition and consumer
demand for the product. The Group may offer a variety of sales
incentive programs at any point in time, including cash offers
to dealers and consumers, lease subsidies which reduce the con-
sumers’ monthly lease payment, or reduced financing rate pro-
grams offered to consumers.
Revenue from receivables from financial services is recognized
using the effective interest method. When loans are issued
below market rates, related receivables are recognized at present
value and revenue is reduced for the interest incentive granted.
The Group offers an extended, separately priced warranty for
certain products. Revenue from these contracts is deferred and
recognized into income over the contract period in proportion
to the costs expected to be incurred based on historical informa-
tion. In circumstances in which there is insufficient historical
information, income from extended warranty contracts is recog-
nized on a straight-line basis.
A loss on these contracts is recognized in the current period if
the sum of the expected costs for services under the contract
exceeds unearned revenue.
For transactions with multiple deliverables, such as when vehicles
are sold with free or reduced in price service programs, the
Group allocates revenue to the various elements based on their
estimated fair values.
2007
20082009
€1= €1= €1=
1.3029
1.3632
1.4303
1.4785
1.4406 1.3917
1.4976
1.5622
1.5050
1.3166
1.4721
1.3106
1.3481
1.3738
1.4487
Exchange rate at December 31
Average exchange rate
First quarter
Second quarter
Third quarter
Fourth quarter