Porsche 2008 Annual Report Download - page 162

To our shareholders The Company
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The impairment test of recognized brands in the consolidated financial statements of Porsche SE
is also based on fair value less costs to sell. The calculations are made by applying the relief from
royalty method (brand equity approach) using a planning period of five years and an assumed
growth rate of 0.75%. This growth rate is based on the circumstances specific to the industry and
the specific price and cost situation. The sensitivity analysis has shown that even without assuming
growth in the terminal value, the brand values are not impaired.
The assumptions described above are adjusted to reflect the current information available taking
assumptions on macro-economic trends as well as historical developments into account.
When determining the value in use for the impairment test of other intangible assets and property,
plant and equipment, local discount rates of at least 8.7% to 9.8% (prior year: 9.1%) have been
used.
If the reasons for impairments charged in prior years no longer exist, the impairments are reversed
up to the recoverable amount (with the exception of goodwill). The amount reversed cannot
exceed the carrying amount that would have been determined, net of depreciation and amortiza-
tion, had no impairment loss been recognized for the asset in prior years.
Investment property
Investment property held to generate rental income is accounted for at amortized cost. The under-
lying useful lives and depreciation methods correspond to those used for items of property, plant
and equipment used by the group. Due to the measurement at amortized cost, the fair values of
the investment property must be disclosed in the notes to the consolidated financial statements.
An income capitalization approach is used to calculate the fair value of each building by determin-
ing the income value based on gross income taking other factors such as land value, remaining
useful lives and a multiplier specific to residential property into account. Group calculations take
account of market information.
Other receivables and financial assets
Other receivables and financial assets (excluding derivative financial instruments) are accounted
for at amortized cost. Appropriate allowance is made for known individual risks and general credit
risks.
Inventories
Inventories include raw material, consumables and supplies as well as work in progress and fin-
ished goods. Inventories are stated at the lower of cost or net realizable value as of the balance
sheet date.
In addition to costs directly attributable, costs of conversion include an appropriate portion of
incurred materials and production overheads as well as production-related depreciation and other
directly attributable costs.