DHL 2012 Annual Report Download - page 158

Financial instruments
A nancial instrument is any contract that gives rise to
a nan cial asset of one entity and a nancial liability or equity
instrument of another entity. Financial assets include in particu-
lar cash and cash equivalents, trade receivables, originated loans
and receivables, and derivative nancial assets held for trading.
Financial liabilities include contractual obligations to deliver cash
or another nancial asset to another entity. ese mainly comprise
trade payables, liabilities to banks, liabilities arising from bonds
and nance leases, and derivative nancial liabilities.
Fair value option
e Group applied the fair value option for the rst time for
nancial year . Under this option, nancial assets or nan-
cial liabilities may be measured at fair value through prot or loss
on initial recognition if this eliminates or signicantly reduces a
measurement or recognition inconsistency (accounting mismatch).
e Group makes use of the option in order to avoid accounting
mismatches.
Financial assets
Financial assets are accounted for in accordance with the pro-
visions of  , which distinguishes between four categories of
nancial instruments.
--  
ese nancial instruments are non-derivative nancial
assets and are carried at their fair value, where this can be meas-
ured reliably. If a fair value cannot be determined, they are carried
at cost. Changes in fair value between reporting dates are generally
recognised in other comprehensive income (revaluation reserve).
e reserve is reversed to income either upon disposal or if the fair
value falls below cost more than temporarily. If, at a subsequent
balance sheet date, the fair value of a debt instrument has increased
objectively as a result of events occurring aer the impairment loss
was recognised, the impairment loss is reversed in the appropri-
ate amount. Impairment losses recognised in respect of equity
instruments may not be reversed to income. If equity instruments
are recognised at fair value, any reversals must be recognised in
other comprehensive income. No reversals may be made in the
case of equity instruments that were recognised at cost. Available-
for-sale nancial instruments are allocated to non-current assets
unless the intention is to dispose of them within  months of the
balance sheet date. In particular, investments in unconsolidated
subsidiaries, marketable securities and other equity investments
are reported in this category.
--  
Financial instruments are assigned to this category if there is
an intention to hold the instrument to maturity and the economic
conditions for doing so are met. ese nancial instruments are
non-derivative nancial assets that are measured at amortised cost
using the eective interest method.
  
ese are non-derivative nancial assets with xed or deter-
minable payments that are not quoted on an active market. Unless
held for trading, they are recognised at cost or amortised cost at
the balance sheet date. e carrying amounts of money market
re ceivables correspond approximately to their fair values due to
their short maturity. Loans and receivables are considered current
assets if they mature not more than  months aer the balance
sheet date; otherwise, they are recognised as non-current assets. If
the recoverability of receivables is in doubt, they are recognised
at amort ised cost, less appropriate specic or collective valuation
allowances. A write-down on trade receivables is recognised if
there are objective indications that the amount of the outstanding
receivable cannot be collected in full. e write-down is recognised
in the income statement via a valuation account.
        
All nancial instruments held for trading and derivatives that
do not satisfy the criteria for hedge accounting are assigned to this
category. ey are generally measured at fair value. All changes
in fair value are recognised in income. All nancial instruments
in this category are accounted for at the trade date. Assets in this
category are recognised as current assets if they are either held for
trading or will likely be realised within  months of the balance
sheet date.
To avoid variations in earnings resulting from changes in
the fair value of derivative nancial instruments, hedge account-
ing is applied where possible and economically useful. Gains and
losses from the derivative and the related hedged item are recog-
nised in income simultaneously. Depending on the hedged item
and the risk to be hedged, the Group uses fair value hedges and
cash ow hedges.
Deutsche Post DHL Annual Report 
154