Mercedes 2013 Annual Report Download - page 196

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An assessment for assets other than goodwill is made at
each reporting date as to whether there is any indication that
previously recognized impairment losses may no longer
exist or may have decreased. If this is the case, Daimler records
a partial or entire reversal of the impairment; the carrying
amount is thereby increased to its recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depreciation)
had no impairment loss been recognized in prior years.
Non-current assets held for sale and disposal groups.
The Group classifies non-current assets or disposal groups
as held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized
is reversed, this reversal is restricted to the impairment loss
previously recognized for the assets or disposal group con-
cerned. The Group generally discloses these assets or disposal
groups separately in the consolidated statement of financial
position.
Inventories. Inventories are measured at the lower of cost
and net realizable value. The net realizable value is the estimated
selling price less any remaining costs to sell. The cost of
inventories is generally based on the specific identification
method and includes costs incurred in acquiring the inven-
tories and bringing them to their existing location and condition.
Costs for large numbers of inventories that are interchange-
able are allocated under the average cost formula. In the case
of manufactured inventories and work in progress, cost
also includes production overheads based on normal capacity.
Financial instruments. A financial instrument is any contract
that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Financial instru-
ments in the form of financial assets and financial liabilities
are generally presented separately. Financial instruments are
recognized as soon as Daimler becomes a party to the contrac-
tual provisions of the financial instrument.
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IAS39 Financial Instruments: Recognition and
Measurement. Transaction costs directly attributable to acqui-
sition or issuance are considered by determining the carrying
amount if the financial instruments are not measured at fair value
through profit or loss. If the transaction date and the settle-
ment date (i.e. the date of delivery) differ, Daimler uses the trans-
action date for purposes of initial recognition or derecognition.
Financial assets. Financial assets primarily comprise
receivables from financial services, trade receivables,
receivables from banks, cash on hand, derivative financial
assets and marketable securities and investments.
Financial assets at fair value through profit or loss. Financial
assets at fair value through profit or loss include those financial
assets designated as held for trading.
Derivatives, including embedded derivatives separated from
the host contract, which are not classified as hedging instru-
ments in hedge accounting, as well as shares and marketable
debt securities acquired for the purpose of selling in the near
term are classified as held for trading. Gains or losses on these
financial assets are recognized in profit or loss.
Loans and receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments that
are not quoted in an active market, such as receivables from
financial services or trade receivables. After initial recognition,
loans and receivables are subsequently carried at amortized
cost using the effective interest method less any impairment
losses. Gains and losses are recognized in the statement
of income when the loans and receivables are impaired or derec-
ognized. Interest effects on the application of the effective
interest method are also recognized in profit or loss.