Porsche 2007 Annual Report Download - page 137

134
To our shareholders
The Company
The new Panamera
Financials
 Accounting principles and measurement
The assets and liabilities of Porsche SE and the German and foreign subsidiaries included by way
of full consolidation are recognized and measured uniformly according to the recognition and
measurement methods applicable in the Porsche Group. The comparative information for fiscal
year 2006/07 is based on the same recognition and measurement methods that were applicable
for the fiscal year 2007/08.
With the exception of certain items such as derivative financial instruments and available-for-sale
financial assets or pensions and similar obligations, the consolidated financial statements are pre-
pared using the historical cost principle. The measurement principles used for these exceptions
are described below.
Intangible assets
Patents, software, licenses and similar rights are recognized at cost pursuant to IAS 38 and
amortized over their useful life on a straight-line basis, unless they are impaired. The useful life
generally ranges from three to five years. Changes in useful lives are treated like changes in
estimates. In addition, residual values and the depreciation methods are checked at the end of
the fiscal year and adjusted if necessary.
Development costs are recognized for vehicles provided that clear allocation of expenses is
possible and all the other criteria of IAS 38 are met. The recognized development costs include all
production overheads directly attributable to the development process that are incurred as of the
time at which all recognition criteria are met. Recognized development costs are amortized from
the production start using the straight-line method over the expected product life cycle of usually
six years. Research and non-capitalizable development costs are expensed as incurred.
Goodwill is not amortized systematically. Rather, each asset or cash generating unit is tested at
least once a year for impairment. The useful life of an intangible asset with an indefinite life is re-
viewed annually to determine whether indefinite life assessment is still justified. If not, the change
in the useful life assessment from indefinite to finite is made prospectively.
Property, plant and equipment
Property, plant and equipment are measured at cost less depreciation over the useful life of the
assets as well as impairment losses. Costs for repairs and maintenance are recognized as current
expenses. Systematic depreciation, mainly using the straight-line and unit of production methods
of depreciation, reflects the pattern in which the asset’s future economic benefits are expected to
be consumed by the entity. Special tools and equipment are depreciated according to units of
production. For plants used in shift operation, depreciation is increased by an additional allowance
for shifts.