Mercedes 2012 Annual Report Download - page 192

201
7 | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Sales in which the Group guarantees the minimum resale value
of the product, such as sales to certain rental car companies,
are accounted for similar to an operating lease. The guaran-
tee of the resale value may take the form of an obligation
by Daimler to pay any deficiency between the proceeds the
customer receives upon resale and the guaranteed amount,
or an obligation to reacquire the vehicle after a certain period
of time at a set price. Gains or losses from the resale of
these vehicles are included in gross profit.
Revenue from operating leases is recognized on a straight-
line basis over the lease term. Among the assets subject
to operating leases are Group products which are purchased
by Daimler Financial Services from independent third-party
dealers and leased to customers. After revenue recognition from
the sale of the vehicles to independent third-party dealers,
these vehicles create further revenue from leasing and remarket-
ing as a result of lease contracts entered into. The Group
estimates that the revenue recognized following the sale of
vehicles to dealers equals approximately the additions to leased
assets at Daimler Financial Services. Additions to leased
assets at Daimler Financial Services were approximately €8
billion in 2012 (2011: approximately €6 billion).
Research and non-capitalized development costs. Expen-
diture for research and development that does not meet
the conditions for capitalization according to IAS38 Intangible
Assets is expensed as incurred.
Borrowing costs. Borrowing costs are expensed as incurred
unless they are directly attributable to the acquisition, con-
struction or production of a qualifying asset and are therefore
part of the cost of that asset.
Government grants. Government grants related to assets
are deducted from the carrying amount of the asset and
are recognized in profit or loss over the life of a depreciable
asset as a reduced depreciation expense. Government grants
which compensate the Group for expenses are recognized
as other operating income in the same periods as the expenses
themselves.
Interest income and interest expense. Interest income
and interest expense includes interest income from invest-
ments in securities, cash and cash equivalents as well as
interest expense from liabilities. Furthermore, interest and
changes in fair values related to interest rate hedging activities
as well as income and expense resulting from the allocation
of premiums and discounts are included. The interest compo-
nents of pensions and similar obligations are also presented
in this line item.
An exception to the aforementioned principles is made
for Daimler Financial Services. In this case, the interest
income and expense and the result from derivative financial
instruments are disclosed under revenue and cost of sales
respectively.
Other financial income/expense, net. Other financial
income/expense, net includes all income and expense from
financial transactions which are not included in interest
income and/or interest expense, and for Daimler Financial
Services are not included in revenue and/or cost of sales.
For example, expense from the compounding of interest on
provisions for other risks is recorded in this line item.
Income taxes. Current income taxes are determined based
on the respective local taxable income of the period and local
tax rules. In addition, current income taxes include adjust-
ments for uncertain tax payments or tax refunds for periods
not yet assessed as well as interest expense and penalties
on the underpayment of taxes. Changes in deferred tax assets
and liabilities are included in income taxes except for changes
recognized in other comprehensive income/loss or directly
in equity.
Deferred tax assets or liabilities are determined based on
temporary differences between financial reporting and
the tax basis of assets and liabilities including differences from
consolidation, loss carryforwards and tax credits. Measure-
ment is based on the tax rates expected to be effective in the
period in which an asset is realized or a liability is settled.
For this purpose, the tax rates and tax rules are used which
have been enacted or substantively enacted at the reporting
date. Deferred tax assets are recognized to the extent
that taxable profit at the level of the relevant tax authority will
be available for the utilization of the deductible temporary
differences. Daimler recognizes a valuation allowance for deferred
tax assets when it is unlikely that a corresponding amount
of future taxable profit will be available.
Tax benefits resulting from uncertain income tax positions
are recognized at the best estimate of the tax amount
expected to be paid.
Earnings per share. Basic earnings per share are calculated
by dividing profit attributable to shareholders of Daimler AG
by the weighted average number of shares outstanding. Diluted
earnings per share additionally reflect the potential dilution
that would occur if all stock option plans were exercised.
Goodwill. For acquisitions, goodwill represents the excess
of the consideration transferred over the fair values assigned
to the identifiable assets proportionally acquired and liabilities
assumed. Goodwill is accounted for at the subsidiaries in
the functional currency of those subsidiaries.
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree’s identifiable assets, which are measured
at fair value.