Mercedes 2013 Annual Report Download - page 194

198
Other financial income/expense, net. Other financial
income/expense, net includes all income and expense from
financial transactions which are not included in interest
income and/or interest expense, and for Daimler Financial
Services are not included in revenue and/or cost of sales.
For example, expense from the compounding of interest on
provisions for other risks is recorded in this line item.
Income taxes. Current income taxes are determined based
on the respective local taxable income of the period and local
tax rules. In addition, current income taxes include adjust-
ments for uncertain tax payments or tax refunds for periods
not yet assessed as well as interest expense and penalties
on the underpayment of taxes. Changes in deferred tax assets
and liabilities are included in income taxes except for
changes recognized in other comprehensive income/loss
or directly in equity.
Deferred tax assets or liabilities are determined based
on temporary differences between financial reporting and the
tax basis of assets and liabilities including differences from
consolidation, loss carryforwards and tax credits. Measurement
is based on the tax rates expected to be effective in the period
in which an asset is realized or a liability is settled. For this pur-
pose, the tax rates and tax rules are used which have been
enacted or substantively enacted at the reporting date. Deferred
tax assets are recognized to the extent that taxable profit
at the level of the relevant tax authority will be available for the
utilization of the deductible temporary differences. Daimler
recognizes a valuation allowance for deferred tax assets when
it is unlikely that a corresponding amount of future taxable
profit will be available.
For uncertain income tax items for which the risk exists that
they will not be utilizable, a provision for income taxes is recog-
nized or, in the case of tax loss carryforwards, the correspond-
ing deferred tax asset is reduced. The assessment is based
on the best possible assessment of the expected tax payment.
Earnings per share. Basic earnings per share are calculated
by dividing profit attributable to shareholders of Daimler AG
by the weighted average number of shares outstanding. Diluted
earnings per share additionally reflect the potential dilution
that would occur if all stock option plans were exercised.
Goodwill. For acquisitions, goodwill represents the excess
of the consideration transferred over the fair values assigned
to the identifiable assets proportionally acquired and liabilities
assumed. Goodwill is accounted for at the subsidiaries
in the functional currency of those subsidiaries.
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree’s identifiable assets, which are measured
at fair value.
Other intangible assets. Intangible assets acquired are
measured at cost less accumulated amortization. If necessary,
accumulated impairment losses are recognized.
Intangible assets with indefinite lives are reviewed annually
to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
Intangible assets other than development costs with finite
useful lives are generally amortized on a straight-line basis over
their useful lives (three to ten years) and are tested for impair-
ment whenever there is an indication that the intangible asset
may be impaired. The amortization period for intangible
assets with finite useful lives is reviewed at least at each year-
end. Changes in expected useful lives are treated as changes
in accounting estimates. The amortization expense on intangible
assets with finite useful lives is recorded in functional costs.
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS38 are met.
Subsequent to initial recognition, the asset is carried at cost less
accumulated amortization and accumulated impairment
losses. Capitalized development costs include all direct costs
and allocable overheads and are amortized on a straight-line
basis over the expected product life cycle (a maximum of ten
years). Amortization of capitalized development costs is
an element of manufacturing costs and is allocated to those
vehicles and components by which they were generated and
is included in cost of sales when the inventory (vehicles) is sold.