DHL 2006 Annual Report Download - page 120

Noncurrent assets held for sale and discontinued operations
Noncurrent assets held for sale and discontinued operations relate primarily
to companies available for sale that are recognized at the lower of the carrying
amount or fair value less costs to sell.
Financial instruments
Financial instruments are available-for-sale nancial 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. e reserve is reversed to income either when the assets
are sold or otherwise disposed of, or if the fair value falls more than
temporarily below their cost. e nancial instruments are accounted for at
the settlement date.
Receivables and other securities as well as liabilities from nancial
services (Deutsche Postbank Group)
Originated loans and receivables are carried at amortized cost. Purchased
loans and receivables categorized as “held-to-maturity” or “loans and
receivables” are measured at amortized cost. Purchased loans and receivables
classied as held for trading are measured at fair value. Held-to-maturity and
originated securities are measured at amortized cost, while securities of the
“at fair value through prot or loss” and “available for sale” categories are
measured at their fair values. Liabilities from nancial services are carried at
amortized cost. Dierences between the amount received and the amount
repayable (premiums, discounts) are recognized or amortized over the
remaining maturities of the liabilities. Proportionate accrued interest is
reported together with the associated liability.
Cash and cash equivalents
Cash and cash equivalents comprise cash, demand deposits and other short-
term liquid nancial assets with an original maturity of up to three months
and are carried at their principal amount. Overdra facilities used are
recognized in the balance sheet as amounts due to banks.
Stock option plan
In accordance with IFRS , the stock option plan for executives is measured
using investment techniques based on option pricing models. Under these
models, the options are measured at fair value on the grant date. e option
price thus calculated is recognized in income under sta costs and spread
over the term of the options.
Provisions
Provisions for pensions are measured using the projected unit credit method
prescribed by IAS  for dened benet plans. Actuarial gains and losses are
recognized, in accordance with IAS ., to the extent that they exceed 
of the dened benet obligation or plan assets, whichever is the greater.
e excess is allocated over the remaining working lives of active employees
and recognized in income. e interest component of pension expenses is
reported under net nance costs. Contributions to dened contribution
pension plans are recognized as sta costs when they are due. Prepaid
contributions are recognized as an asset to the extent that a cash refund or a
reduction in the future payments is available.
Other provisions are recognized for liabilities to third parties arising from
past events, whose settlement is expected to result in an outow of economic
benets and which can be measured reliably. ey represent uncertain
obligations that are carried at the best estimate of the expenditure required to
settle the obligation. Provisions with more than one year to maturity are
discounted at market rates of interest that reect the risk and time until
settlement of the obligation.
Financial liabilities
On initial recognition, nancial liabilities are carried at fair value less
transaction costs. e price determined on a price-ecient and liquid market
or a fair value determined using the treasury risk management system
deployed within the Group is taken as the fair value. In subsequent periods
the nancial liabilities are measured at amortized cost. Any dierences
between the amount received and the amount repayable are recognized in
income over the term of the loan using the eective interest method.
Measurement is performed on a historical cost basis and any premiums or
discounts are accrued or deferred over the term to maturity. e balance of
issue costs and discounts on the Group’s own bond issues is deferred over the
bond term. Any discount not yet earned or not yet paid on money market
securities is accrued or deferred over the term to maturity. Liabilities from
nance leases are recognized at the lower of the present value of the lease
payments or the market value of the capitalized leased asset.
Liabilities
Trade payables and other liabilities are carried at amortized cost. e fair
value of the liabilities corresponds more or less to their carrying amount.
Deferred taxes
In accordance with IAS , deferred taxes are recognized for temporary
dierences between the carrying amounts in the IFRS nancial statements
and the tax accounts of the individual entities. Deferred tax assets also include
tax reduction claims which arise from the expected future utilization
of existing tax loss carryforwards and which are likely to be realized.
In compliance with IAS . (b) and IAS . (b), deferred tax assets or
liabilities were only recognized for temporary dierences between the
carrying amounts in the IFRS nancial statements and in the tax accounts of
Deutsche Post AG and Deutsche Postbank AG where the dierences arose
aer January , . No deferred tax assets or liabilities can be recognized for
temporary dierences resulting from initial dierences in the opening tax
accounts of Deutsche Post AG and Deutsche Postbank AG as of January ,
. Additional disclosures on deferred taxes from tax loss carryforwards
can be found in Note .
In accordance with IAS , deferred tax assets and liabilities are calculated by
using the tax rates applicable in the individual countries at the balance sheet
date or announced for the time when the deferred tax assets and liabilities are
realized. e tax rate of . applied to German Group companies comprises
the corporation tax rate plus the solidarity surcharge, as well as a municipal
trade tax rate which is calculated as the average of the dierent municipal
trade tax rates. Foreign Group companies use their individual income tax rate
to calculate deferred tax items. e income tax rates applied for foreign
companies range from  to .
Contingent liabilities
Contingent liabilities represent possible obligations whose existence will be
conrmed only by the occurrence or nonoccurrence of one or more uncertain
future events not wholly within the control of the enterprise. Contingent
liabilities also include certain obligations that will probably not lead to an
outow of resources embodying economic benets, or where the amount of
the outow of resources embodying economic benets cannot be measured
with sucient reliability. In accordance with IAS , contingent liabilities are
not recognized as liabilities (see also Note ).
Estimates used in accounting and measurement
e preparation of IFRS-compliant consolidated nancial statements requires
the use of estimates. All estimates are reassessed on an ongoing basis and
are based on historical experience and expectations with regard to future
events that appear reasonable under the given circumstances. Estimates
and assumptions possibly requiring adjustment of the carrying amounts of
assets and liabilities might relate to goodwill as well as deferred taxes within
the Group.
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Deutsche Post World Net Annual Report 2006