Porsche 2012 Annual Report Download - page 178

Financials
Notes to the consolidated fi nancial statements
amount of the contract costs incurred (zero profit method). If the total of accumulated contract
costs and reported profits exceeds advance payments received, the development contracts are
recognized as an asset under trade receivables as future receivables from long-term development
contracts. Any negative balance is reported under trade payables. The principle of measuring
assets at the lower of carrying amount and net realizable value is taken into consideration.
Financial instruments
According to IAS 39, a financial instrument is any contract that gives rise to a financial asset at
one entity and a financial liability or equity instrument at another entity. If the trade date of a
financial asset differs from the settlement date, it is initially accounted for at the settlement date.
Initial recognition of a financial instrument is at fair value. Transaction costs are included for
financial instruments not designated as at fair value through profit or loss. Subsequent meas-
urement of financial instruments is either at fair value or amortized cost depending on their cate-
gory. Each financial instrument is allocated to a category upon initial recognition.
With respect to measurement, IAS 39 distinguishes between the following categories of financial
assets:
· Financial assets at fair value through profit or loss (FVtPL) and held for trading (HfT)
· Held-to-maturity investments (HtM)
· Available-for-sale financial assets (AfS)
· Loans and receivables (LaR)
Financial liabilities are divided into the two categories:
· Financial liabilities at fair value through profit or loss (FVtPL) and held for trading (HfT)
· Financial liabilities measured at amortized cost (FLAC)
Depending on the category, measurement of financial instruments is either at fair value or
amortized cost.
Fair value corresponds to the market price provided the financial instruments measured are
traded on an active market. If there is no active market for a financial instrument, fair value is
calculated using appropriate valuation techniques such as generally accepted option price
models or discounting future cash flows with the market interest rate, or by referring to the most
recent business transactions between knowledgeable, willing and independent business part-
ners for one and the same financial instrument, if necessary confirmed by the banks processing
the transactions.
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