Reebok 2013 Annual Report Download - page 206

adidas Group
/
2013 Annual Report
Consolidated Financial Statements
202
2013
Notes
/
04.8
/
Financial assets
All purchases and sales of financial assets are recognised on the trade date. Costs of purchases include transaction
costs. Available-for-sale financial assets include non-derivative financial assets which are not allocable under
another category of IAS 39. If their respective fair value can be measured reliably, they are subsequently carried at
fair value. If this is not the case, these are measured at amortised cost. Realised and unrealised gains and losses
arising from changes in the fair value of financial assets are included in the income statement for the period in
which they arise, except for available-for-sale financial assets where unrealised gains and losses are recognised
in equity unless they are impaired.
Borrowings and other liabilities
Borrowings and other liabilities are recognised at fair value using the “effective interest method”, net of
transaction costs incurred. In subsequent periods, long-term borrowings are stated at amortised cost using the
“effective interest method”. Any difference between proceeds (net of transaction costs) and the redemption value
is recognised in the income statement over the term of the borrowing.
In 2012, adidas AG issued a convertible bond which grants the holder the right to convert the bond into
adidas AG shares. The number of underlying shares is fixed and does not vary subject to the fair value of the
shares.
Compound financial instruments (e.g. convertible bonds) are divided into a liability component shown under
borrowings and into an equity component resulting from conversion rights. The equity component is included
in the capital reserve. The fair value of the liability component is determined by discounting the interest and
principal payments of a comparable liability without conversion rights, applying risk-adjusted interest rates. The
liability component is subsequently measured at amortised cost using the “effective interest method”. The equity
component is determined as the difference between the fair value of the total compound financial instrument and
the fair value of the liability component and is reported within equity. There is no subsequent measurement of
the equity component. At initial recognition, directly attributable transaction costs are assigned to the equity and
liability component pro rata on the basis of the respective carrying amounts.
Other provisions and accrued liabilities
Other provisions are recognised where a present obligation (legal or constructive) to third parties has been
incurred as a result of a past event which can be estimated reliably and is likely to lead to an outflow of resources,
and where the timing or amount is uncertain. Other non-current provisions are discounted if the effect of
discounting is material.
Accrued liabilities are liabilities to pay for goods or services that have been received or supplied but have not
been paid, invoiced or formally agreed with the supplier, including amounts due to employees. Here, however, the
timing and amount of an outflow of resources is not uncertain.
Pensions and similar obligations
Provisions and expenses for pensions and similar obligations relate to the Group’s obligations for defined benefit
and defined contribution plans. The obligations under defined benefit plans are determined separately for each
plan by valuing the employee benefits accrued in return for their service during the current and prior periods.
These benefit accruals are discounted to calculate their present value, and the fair value of any plan assets is
deducted in order to determine the net liability. The discount rate is set on the basis of yields of high-quality
corporate bonds at the balance sheet date provided there is a deep market for high-quality corporate bonds
in a given currency. Otherwise, government bond yields are used as a reference. Calculations are performed
by qualified actuaries using the “projected unit credit method” in accordance with IAS 19 “Employee Benefits”.
Obligations for contributions to defined contribution plans are recognised as an expense in the income statement
as incurred.