Mercedes 2015 Annual Report Download - page 198

E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 205
Subject to EU endorsement of these standards, which are then
to be adopted in future periods, Daimler does not currently
plan to apply these standards earlier. Other IFRSs issued but
not EU endorsed are not expected to have a significant impact
on the Group’s profitability, liquidity and capital resources
or financial position.
Presentation
Presentation in the consolidated statement of financial position
differentiates between current and non-current assets and
liabilities. Assets and liabilities are classified as current if they
are expected to be realized or settled within one year or within
a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
The consolidated statement of income is presented using
the cost-of-sales method.
The Group’s consolidated financial statements are significantly
influenced by the activities of its financial services business.
To enhance readers’ understanding of the Group’s profitability,
liquidity and capital resources and financial position, unaudited
information with respect to the Group’s industrial and financial
services business activities (Daimler Financial Services) is
provided in addition to the audited consolidated financial state-
ments. Such information is not required by IFRS and is not
intended to, and does not represent the separate IFRS profit-
ability, liquidity and capital resources and financial position
of the Group’s industrial or financial services business activities.
Eliminations of the effects of transactions between the
industrial and financial services businesses have generally
been allocated to the industrial business columns.
Measurement
The consolidated financial statements have been prepared
on the historical cost basis with the exception of certain items
such as available-for-sale financial assets, derivative financial
instruments, hedged items, and pensions and similar obligations.
The measurement models applied to those exceptions are
described below.
Principles of consolidation
The consolidated financial statements include the financial
statements of Daimler AG and the financial statements of
all subsidiaries, including structured entities which are directly
or indirectly controlled by Daimler AG. Control exists if the
parent company has the power of decision over a subsidiary
based on voting rights or other rights, if it participates in
positive and negative variable returns from a subsidiary, and
if it can affect these returns by its power of decision.
Structured entities which are controlled also have to be
consolidated. Accordingly, the assets and liabilities remain in
the consolidated statement of financial position. Structured
entities are entities which have been designed so that voting
or similar rights are not relevant in deciding who controls
the entity. This is the case for example if voting rights relate
to administrative tasks only and the relevant activities are
directed by means of contractual arrangements.
The financial statements of consolidated subsidiaries which
are included in the consolidated financial statements are
generally prepared as of the reporting date of the consolidated
financial statements. The financial statements of Daimler AG
and its subsidiaries included in the consolidated financial
statements are prepared using uniform recognition and mea-
surement principles. All intercompany assets and liabilities,
equity, income and expenses as well as cash flows from trans-
actions between consolidated entities are entirely eliminated
in the course of the consolidation process.
Business combinations are accounted for using the purchase
method.
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler’s percentage ownership without loss
of control are accounted for as an equity transaction between
owners.
Investments in associated companies,
joint ventures or joint operations
An associated company is an entity over which the Group
has significant influence. Significant influence is the power
to participate in the financial and operating policy decisions
of the investee. Associated companies are generally accounted
for using the equity method.
For entities over which Daimler has joint control together
with a partner (joint arrangements), it has to be decided
if a joint operation or a joint venture exists. In a joint venture,
the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. For joint ventures,
the equity method has to be applied. A joint operation exists
when the jointly controlling parties have direct rights to the
assets and obligations for the liabilities. In this case, the prorated
assets and liabilities and the prorated income and expenses
are generally to be recognized. As the joint operations recognized
at the end of the reporting period have no significant impact
on the consolidated financial statements, they are accounted
for using the equity method.