Porsche 2004 Annual Report Download - page 118

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Group Notes Principles114
Pension provisions are measured using the projected unit credit method taking into
account future salary and pension developments. The corridor approach is used.
Non-current provisions are disclosed at present value.
Expense provisions are not recognized.
Deferred taxes are recognized using the liability method. Deferred taxes on temporary
differences that arose without effect on income are also recognized without effect on income.
Consolidated Group
The consolidated financial statements of Porsche AG include all entities in which Porsche AG
has the power to govern the financial and operating policies, either directly or indirectly
(“control” concept).
The group of fully consolidated entities includes Porsche AG and 22 German (previous year: 22)
and 57 international (previous year: 52) subsidiaries, including special purpose securities funds
and variable interest entities.
Porsche Design Great Britain Limited, London, Porsche Design of France SARL, Serris,
Porsche Design of Italy S.R.L., Milan, CTS CarTopSystems Belgium N.V., Antwerp and
Porsche Design Asia Pacific Limited, Hong Kong, are included in the consolidated financial state-
ments of Porsche for the first time as of July 31, 2005. The changes in the consolidated group
are immaterial for the net assets, financial position and results of operations of the Group.
The complete list of equity investments of Porsche AG and the Porsche Group is filed with the
commercial register of Stuttgart district court (HRB 5211).
Consolidation Principles
Capital consolidation is performed in accordance with the purchase method pursuant to IFRS 3
(“Business Combinations”). Purchased assets and liabilities are measured at their fair value on
the date of acquisition. The purchase costs of the shares acquired are then offset against pro rata
revalued equity of the subsidiary. Any remaining positive difference from offsetting the purchase
price against the identified assets and liabilities is shown as goodwill.
Expenses and income as well as receivables, liabilities and provisions between the consolidated
entities are offset. Intercompany profits from the disposal of assets within the Group which have
not yet been resold to third parties are eliminated. Deferred taxes are recognized for consolida-
tions with effect on income taxes. In addition, guarantees and warranties assumed by Porsche AG
or one of its consolidated subsidiaries in favor of other subsidiaries are eliminated.