Porsche 2007 Annual Report Download - page 143

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To our shareholders
The Company
The new Panamera
Financials
Current taxes
Current income tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted by the
balance sheet date. Adequate provision was made for future possible tax obligations, where
discernable, considering a large number of factors such as the interpretation, commentary and
court rulings on the pertinent tax legislation as well as past experience.
Current tax relating to items recognized directly in equity is recognized in equity and not in the
income statement.
Hybrid capital
Based on the bond conditions of the hybrid capital issued, this is accounted for as an equity
component of the Group in accordance with IAS 32. This means that the deductible interest is
not disclosed under interest expenses but treated like a dividend obligation to the shareholders.
Any capital procurement costs are deducted directly from the hybrid capital taking tax effects
into account.
Pension provisions
In accordance with IAS 19, provisions for pension obligations for defined benefit plans are
measured for actuarial purposes using the prescribed projected unit credit method. This method
considers not only the pensions and future claims known on the balance sheet date but also future
anticipated increases in salaries and pensions. If pension obligations are reinsured using plan
assets they are disclosed net. The calculation is based on actuarial opinions taking account of
biometric assumptions. The Company uses the corridor rule to measure the pension commitments
and determine the pension expenses. Actuarial gains and losses are not taken into account pro-
vided they do not exceed ten percent of the commitment or ten percent of the fair value of the
existing plan assets. From the following fiscal year, the amount in excess of the corridor is dis-
tributed over the average residual service period of the active workforce and recognized. Past
service cost is recognized on a straight-line basis over the average period until the benefits be-
come vested. If the benefits are already vested immediately following the introduction of, or chan-
ges to, a pension plan, past service cost is recognized immediately in profit or loss. Service cost
is disclosed in personnel expenses while the interest portion of the addition to the provision and
income from plan assets is recorded in the financial result. The interest rate used to discount
provisions is determined on the basis of the return on long-term high-quality corporate bonds on
the balance sheet date.
Other provisions
Other provisions are recognized if a past event has led to a current legal or constructive obligation
to third parties which is expected to lead to a future outflow of resources that can
be estimated reliably. Provisions for warranty claims are set up taking account of the past or
estimated future claims pattern. Non-current provisions are stated at their settlement amount
discounted to balance sheet date. The settlement amount also includes the estimated cost
increases. The interest rate used is a pre-tax rate that reflects current market assessments
of the time value of money and the risks specific to the liability. The expense resulting from
the unwinding of the interest rate is recognized in finance cost.