Mercedes 2010 Annual Report Download - page 182

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To enhance readers’ understanding of the Group’s consolidated
financial statements, unaudited information with respect to
the results of operations and financial position of the Group’s
industrial and financial services business activities are pro-
vided in addition to the audited consolidated financial statements.
Such information, however, is not required by IFRS and is not
intended to, and does not represent the separate IFRS results
of operations and financial position of the Group’s industrial
or financial services business activities. Eliminations of the effects
of transactions between the industrial and financial services
businesses have generally been allocated to the industrial busi-
ness columns.
To enhance readers’ understanding of the Group’s financial posi-
tion, the Group decided to present marketable debt securities
in the statement of financial position and notes thereto separately
so that it is possible to determine liquidity directly from the
statement of financial position. These debt instruments, classified
as available-for-sale financial assets, form part of the Group’s
liquidity management function and were previously reported within
“Other financial assets.” The prior-year presentation has been
adjusted accordingly (for further information see Note 15).
Measurement. The consolidated financial statements have been
prepared on the historical cost basis with the exception of
certain items such as available-for-sale financial assets, deriva-
tive financial instruments, hedged items and pensions and
similar obligations. The measurement models applied to those
exceptions are described below.
Risks and uncertainties. Daimler’s financial position, results
of operations and cash flows are subject to numerous risks and
uncertainties. For example, a renewed downturn of the global
economy, renewed financial turbulence or a growth slump in China
could cause actual results to differ from current expectations.
Additional parameters which may cause actual results to differ
from current expectations include further increases in overca-
pacity and the intensity of competition in the automotive industry;
dependence on suppliers, especially single-source suppliers;
a permanent shift in consumer preference towards smaller cars;
implementation of new technologies; fluctuations in currency
exchange rates, interest rates and commodity prices; the resolu-
tion of significant legal proceedings and governmental investi-
gations; and environmental and other government regulations.
Principles of consolidation. The consolidated financial state-
ments include the financial statements of Daimler AG and, in
general, the financial statements of Daimler AG’s subsidiaries,
including special purpose entities which are directly or indirectly
controlled by Daimler AG. Control means the power, directly
or indirectly, to govern the financial and operating policies of an
entity so that the Group obtains benefits from its activities.
The financial statements of consolidated subsidiaries are generally
prepared as of the reporting date of the consolidated financial
statements, except for Mitsubishi Fuso Truck and Bus Corpora-
tion (MFTBC), a significant subgroup which is consolidated
with a one-month time lag. Adjustments are made for significant
events or transactions that occur during the time lag.
The financial statements of Daimler AG and its subsidiaries included
in the consolidated financial statements have been prepared
using uniform recognition and valuation principles. All significant
intercompany accounts and transactions relating to consolidated
subsidiaries and consolidated special purpose entities have been
eliminated.
Business combinations are accounted for using the purchase
method.
Changes in equity interests in Group subsidiaries that reduce or
increase Daimler’s percentage ownership without loss of control
are accounted for as an equity transaction between owners.
As an additional funding source, Daimler transfers finance receiv-
ables, in particular receivables from the leasing and automotive
business, to special purpose entities. Daimler thereby principally
retains significant risks of the transferred receivables. Accord-
ing to IAS 27 Consolidated and Separate Financial Statements
and the Standing Interpretations Committee (SIC) Interpreta-
tion 12 Consolidation – Special Purpose Entities, these special
purpose entities have to be consolidated by the transferor.
The transferred financial assets remain on Daimler’s consoli-
dated statement of financial position.