Porsche 2009 Annual Report Download - page 156

156 Financials
Financial instruments
According to IAS 39, a financial instrument is any contract that gives rise to a financial as-
set at one entity and a financial liability or equity instrument at another entity. If the trade date of a
financial asset differs from the settlement date, it is initially accounted for at the settlement date.
Initial recognition of a financial instrument is at fair value. Transaction costs are included for finan-
cial instruments not designated as at fair value through profit or loss. Subsequent measurement of
financial instruments is either at fair value or amortized cost depending on their category. Each
financial instrument is allocated to a category upon initial recognition.
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)
Financial liabilities are divided into the two categories:
· Financial liabilities at fair value through profit or loss (FVtPL) and held for trading (HfT)
· Financial liabilities measured at amortized 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 calcu-
lated using appropriate valuation techniques such as generally accepted option price models or
discounting future cash flows with the market interest rate, or by referring to the most recent busi-
ness transactions between knowledgeable, willing and independent business partners for one and
the same financial instrument, if necessary confirmed by the banks processing the transactions.
Amortized cost corresponds to the original cost less redemption, impairment losses and
the release of any difference between costs and the amount repayable upon maturity calculated by
applying the effective interest method. Financial instruments are recognized as soon as the Porsche
SE group becomes a party to the contractual provisions of the financial instrument. They are gener-
ally derecognized when the contractual right to the cash flows expires or this right is transferred to
a third party.