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Deutsche Post World Net Annual Report 2007
Goodwill is regularly reported in the Group’s balance sheet as a conse-
quence of business combinations. When an acquisition is initially recog-
nised in the consolidated nancial statements, all identi able assets, li-
abilities and contingent liabilities are measured at their fair values at the
date of acquisition. One of the most important estimates this requires is
the determination of the fair values of these assets and liabilities at the
date of acquisition. Land, buildings and o ce equipment are generally
valued by independent experts, whilst securities for which there is an
active market are recognised at the quoted exchange price. If intangible
assets are identi ed in the course of an acquisition, then in the majority
of cases their measurement is based on the opinion of an independent
external expert valuer, depending on the type of intangible asset and
the complexity involved in determining its fair value. e independent
expert determines the fair value using appropriate valuation techniques,
normally based on expected future cash ows. In addition to the as-
sumptions about the development of future cash ows, these valuations
are also signi cantly a ected by the discount rates used.
Impairment testing for goodwill is based on assumptions with respect
to the future. e Group carries out these tests annually and also when-
ever there are indications that goodwill may have become impaired. e
recoverable amount of the CGU must then be calculated. is amount is
the higher of fair value less costs to sell and value in use. e determina-
tion of value in use requires adjustments and estimates to be made with
respect to forecasted future cash ows and the discount rate applied.
Although management believes that the assumptions made for the pur-
pose of calculating the recoverable amount are appropriate, possible
unforeseeable changes in these assumptions could result in an impair-
ment loss that could negatively a ect the Group’s net assets, nancial
position and results of operations.
e pending legal proceedings in which Deutsche Post World Net is
involved are reported under Note . e outcome of these proceedings
could have a signi cant e ect on the net assets, nancial position and
results of operations of the Group. Management regularly analyses the
information currently available about these proceedings and recognises
provisions for probable obligations including estimated legal costs. In-
ternal and external legal advisers participate in making this assessment.
In deciding on the necessity for a provision, management takes into
account the probability of an unfavourable outcome and whether the
amount of the obligation can be estimated with su cient reliability.
e fact that an action has been launched or a claim asserted against
the Group, or that a legal dispute has been disclosed in the Notes, does
not necessarily mean that any provision recognised for the associated
risk is adequate.
All assumptions and estimates are based on the circumstances prevail-
ing and assessments made at the balance sheet date. For the purpose of
estimating the future development of the business, a realistic assessment
was also made at that date of the economic environment likely to apply
in the future to the di erent sectors and regions in which the Group
operates. In the event of developments in this general environment that
diverge from the assumptions made, the actual amounts may di er from
the estimated amounts. In such cases, the assumptions made and, where
necessary, the carrying amounts of the relevant assets and liabilities are
adjusted accordingly.
At the date of preparation of the consolidated nancial statements, there
is no indication that any signi cant change in the assumptions and es-
timates made will be required, so that on the basis of the information
currently available it is not expected that there will be any signi cant
adjustments in nancial year 00 to the carrying amounts of the assets
and liabilities recognised in the nancial statements.
7 Consolidation methods
e consolidated nancial statements are based on the IFRS n a n c i a l
statements of Deutsche Post AG and the subsidiaries, joint ventures and
associates included in the consolidated nancial statements, prepared
in accordance with uniform accounting policies as at December
and audited by independent auditors.
Acquisition accounting for subsidiaries included in the consolidated
nancial statements uses the purchase method of accounting. e cost
of the acquisition corresponds to the fair value of the assets given up, the
equity instruments issued and the liabilities incurred or assumed at the
transaction date, plus any costs directly attributable to the acquisition.
Joint ventures are proportionately consolidated in accordance with
IAS . Assets and liabilities, as well as income and expenses, of jointly
controlled companies are included in the consolidated nancial state-
ments in proportion to the interest held in these companies. Propor-
tionate acquisition accounting as well as recognition and measurement
of goodwill use the same methods as applied to the consolidation of
subsidiaries.
Companies on which the parent can exercise significant influence
( associates) are accounted for in accordance with the equity method
using the purchase method of accounting. Any goodwill is recognised
under investments in associates.
Intra-Group revenue, other operating income and expenses as well as re-
ceivables, liabilities and provisions between consolidated companies are
eliminated. Inter-company pro ts or losses from intra-Group deliveries
and services not realised by sale to third parties are eliminated.