DHL 2011 Annual Report Download - page 176

 Exercise of judgement in applying the accounting policies
 e preparation of -compliant consolidated  nancial
statements requires the exercise of judgement by management.
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. For
example, this applies to assets held for sale. In this case, it must be
determined whether the assets are available for sale in their pres-
ent condition and whether their sale is highly probable. If this is
the case, the assets and the associated liabilities are reported and
measured as assets held for sale and liabilities associated with
assets held for sale.
Estimates and assessments made by management
 e preparation of the consolidated  nancial statements
in accordance with  s requires management to make certain
assumptions and estimates that may a ect the amounts of the assets
and liabilities included in the balance sheet, the amounts of income
and expenses, and the disclosures relating to contingent liabilities.
Examples of the main areas where assumptions, estimates and the
exercise of management judgement occur are the recognition of
provisions for pensions and similar obligations, the calculation of
discounted cash  ows for impairment testing and purchase price
allocations, taxes and legal proceedings.
When determining the provisions for pensions and similar
obligations, the discount rate used is an important factor that has
to be estimated. An increase or a reduction of one percentage point
in the discount rate used would result in a reduction or increase of
around   million in the present value of the total obligations of
pension plans in Germany. For Group companies in the , such
a change in the discount rate would result in a decrease or increase
in the present value of the total obligation of around   million.
Since actuarial gains and losses are spread over a number of years
if they exceed   of the higher of the de ned bene t obligation
and the fair value of the plan assets, changes in the discount rate
used for the Group’s bene t plans have only a partial e ect or no
e ect at all on the expense or the carrying amount of the provisions
recognised in the following  nancial year.
 e Group has operating activities around the globe and
is subject to local tax laws. Management can exercise judgement
when calculating the amounts of current and deferred taxes in the
relevant countries. Although management believes that it has made
a reasonable estimate relating to tax matters that are inherently
uncertain, there can be no guarantee that the actual outcome of
these uncertain tax matters will correspond exactly to the original
estimate made. Any di erence between actual events and the esti-
mate made could have an e ect on tax liabilities and deferred taxes
in the period in which the matter is  nally decided.  e amount
recognised for deferred tax assets could be reduced if the estimates
of planned taxable income or the tax bene ts achievable as a result
of tax planning strategies are revised downwards, or in the event
that changes to current tax laws restrict the extent to which future
tax bene ts can be realised.
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 liabil-
ities are measured at amortised cost. Any di erences between the
amount received and the amount repayable are recognised in in-
come over the term of the loan using the e ective interest method.
Liabilities
Trade payables and other liabilities are carried at amortised
cost.  e fair value of the liabilities corresponds more or less to
their carrying amount.
Deferred taxes
In accordance with  , deferred taxes are recognised for
temporary di erences between the carrying amounts in the 
 nan cial statements and the tax accounts of the individual entities.
Deferred tax assets also include tax reduction claims which arise from
the expected future utilisation of existing tax loss carryforwards and
which are likely to be realised. In compliance with  . (b) and
 . (b), deferred tax assets or liabilities were only recognised
for temporary di erences between the carrying amounts in the 
 nancial statements and in the tax accounts of Deutsche Post 
where the di erences arose a er  January . No deferred tax
assets or liabilities are recognised for temporary di erences result-
ing from initial di erences in the opening tax accounts of Deutsche
Post  as at  January . Further details on deferred taxes from
tax loss carryforwards can be found in Note .
In accordance with  , deferred tax assets and liabilities
are calculated using the tax rates applicable in the individual coun-
tries at the balance sheet date or announced for the time when the
deferred tax assets and liabilities are realised.  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 that is calculated as the average of the di erent munici-
pal trade tax rates. Foreign Group companies use their individual
income tax rates to calculate deferred tax items.  e income tax
rates applied for foreign companies amount to up to  .
Income taxes
Income tax assets and liabilities are measured at the amounts
for which repayments from or payments to the tax authorities are
expected to be received or made.
Contingent liabilities
Contingent liabilities represent possible obligations whose
existence will be con rmed only by the occurrence or non-occur-
rence 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  , contingent
liabilities are not recognised as liabilities; see Note .
Deutsche Post DHL Annual Report 
170