DHL 2003 Annual Report Download - page 107
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Notes
Items of property, plant, and equipment are written down
if there are indications of impairment and if the recoverable amount
is lower than amortized cost. The write-downs are reversed if the
reasons for the impairment losses no longer apply.
Finance leases
In accordance with IAS 17, beneficial ownership of leased assets is
transferred to the lessee if the lessee bears substantially all the risk
and rewards incident to ownership of the asset. Where Deutsche
Post World Net is the beneficial owner, the asset is capitalized at the
date of inception of the lease either at the fair value or at the present
value of the minimum lease payments, if this is less than the fair
value. Depreciation methods and useful lives correspond to those
of comparable purchased assets.
Noncurrent financial assets
Investments in associates are carried at equity in accordance with
IAS 28 (Accounting for Investments in Associates). Based on the
cost of acquisition at the time of purchase of the investments, the
carrying amount of the investments is increased or reduced to
reflect changes in the equity of the associates attributable to the
investments of Deutsche Post AG. Goodwill contained in the carry-
ing amounts of the investments is normally reduced by straight-line
amortization over the expected useful life of 15 to 20 years. The
useful lives are determined and goodwill is regularly tested for
impairment using the same procedures as for the goodwill of sub-
sidiaries.
Other noncurrent financial assets include in particular
investments in unconsolidated subsidiaries, financial instruments,
and other equity investments. Under IAS 39, noncurrent financial
assets are classified as “available for sale” or “held to maturity”.
Available-for-sale financial instruments are carried at their
fair value, where this can be measured reliably. Changes in fair value
between reporting dates are generally recognized directly in the
revaluation reserve. This reserve is reversed to income either when
the assets are sold or otherwise disposed of, or if the fair value of
the assets falls more than temporarily below their cost. Held-to-
maturity financial instruments are carried at amortized cost at the
balance sheet date. Impairment losses are charged to income if the
recoverable amount falls below the carrying amount.
Financial instruments classified as “loans and receivables
originated by the enterprise” (originated loans and receivables), which
include long-term loans, are measured at amortized cost.
Inventories
Finished goods and goods purchased and held for resale are carried
at the lower of cost or net realizable value. Valuation allowances are
charged for obsolete inventories and for slow-moving goods.
Receivables and other assets
Unless held for trading, receivables and other assets are carried at
amortized cost at the balance sheet date. Doubtful receivables are
carried at their principal amount, less appropriate specific
allowances.
All financial instruments held for trading and derivatives are
assigned to the “trading” category. They are generally measured at
their fair values, and all changes in fair value are recognized in
income. Under IAS 39, this applies to all derivatives that do not
satisfy the strict criteria for cash flow hedge accounting under IAS
39.142. Fair value measurement is also applied irrespective of the
effectiveness of the hedges. These financial instruments are accounted
for at the trade date. Note 45 contains detailed disclosures on hedges.
Current financial instruments
Current financial instruments are available-for-sale financial
assets, and are carried at their fair values at the balance sheet date.
Unrealized gains or losses from remeasurement are generally
credited or charged directly to the revaluation reserve in equity.
This reserve is reversed to income either when the assets are sold
or otherwise disposed of, or if the fair value of the assets falls more
than temporarily below their cost. The financial instruments are
accounted for at the settlement date.
Receivables and liabilities from financial services
Originated loans and receivables are carried at amortized cost.
Purchased loans and receivables classified as held to maturity are
measured at cost. Purchased loans and receivables classified as
available for sale or held for trading are measured at their fair
values. Held-to-maturity and originated securities are measured
at amortized cost, while available-for-sale securities and securities
held for trading are measured at their fair values.
Financial Statements