Porsche 2007 Annual Report Download - page 141

138
To our shareholders
The Company
The new Panamera
Financials
With respect to measurement, IAS 39 distinguishes between the following categories of
financial assets:
– Financial assets at fair value through profit or loss (FVtPL) and held for trading (HfT)
– Held-to-maturity investments (HtM)
– Available-for-sale financial assets (AfS)
– Loans and receivables (LaR).
By contrast, financial liabilities are divided into the two categories:
– Financial liabilities at fair value through profit or loss (FVtPL) and held for trading (HfT) and
– Financial liabilities measured at amortised cost (FLAC).
Depending on the category, measurement of financial instruments is either at fair value or
amortized cost.
Fair value corresponds to market price provided the financial instruments measured are traded
on an active market. If there is no active market for a financial instrument, fair value is calculated
using appropriate actuarial methods such as recognized option price models or discounting future
cash flows with the market interest rate and by confirmations from the banks processing the trans-
actions. Amortized cost corresponds to costs of purchase less redemption, impairment losses
and the reversal of any difference between costs of purchase and the amount repayable upon
maturity in accordance with the effective interest method. Financial instruments are recognized as
soon as Porsche becomes a party to the financial instrument. They are generally derecognized
when the contractual right to cash flow expires or this right is transferred to a third party.
Primary financial instruments
Financial instruments which are recognized at fair value contain securities in the held-for-trading
category and financial assets which are initially recognized as financial assets at fair value through
profit or loss. Gains and losses from subsequent measurement are recognized in the net profit or
loss. Financial instruments classified upon initial recognition at fair value through profit or loss
include hybrid securities, index and discount certificates.
Financial instruments which are held to maturity are accounted for at cost. Gains and losses from
subsequent measurement are recognized in net profit or loss.
Financial instruments categorized as available for sale are measured at fair value. Unrealized
gains and losses from subsequent measurement are recognized in equity after considering
deferred taxes until the investment is disposed of or an objective impairment occurs. Equity
investments disclosed as financial assets and not measured at equity also constitute available-
for-sale investments and are measured at fair value. If no active market exists and fair value
cannot reasonably be expected to be determined, they are measured at cost.
Financial assets are subjected to an impairment test if there is an indication that the value of the
asset may be permanently impaired. An impairment loss is immediately recorded as an expense.
Any loss previously recorded in equity for available-for-sale investments is then also posted to the
income statement. Any increase in value at a later date is accounted for debt instruments by
reversal of the impairment loss through profit or loss.