Porsche 2010 Annual Report Download - page 155

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Where group companies act as the lessor under finance leases, receivables relating to the
leases are initially recognized at an amount equal to the net investment.
Borrowing costs
Borrowing costs that are attributable to the acquisition, construction or production of a
qualifying asset are recognized as part of the cost of that asset. No borrowing costs were capital-
ized in SFY 2010. In the comparative period, an amount of €0.8 million was capitalized in discontin-
ued operations until the date of deconsolidation. A borrowing cost rate of 3.9% was assumed in the
comparative period for this purpose. All other borrowing costs are expensed as incurred.
Impairment test
At the end of each reporting period, the group assesses whether there is any indication of
impairment. An impairment test is performed at least once a year for goodwill, capitalized costs for
products under development and intangible assets with an indefinite useful live. For intangible as-
sets with finite useful lives, property, plant and equipment as well as investments accounted for at
equity an impairment test is performed when there is an indication that the asset may be impaired.
With respect to the latter, please also refer to the section on equity accounting under “Consolidation
principles” above.
The recoverable amount is determined in the course of impairment testing. The recoverable
amount is the higher of fair value less costs to sell and value in use. The fair value less costs to sell
is the amount obtainable from the sale of an asset in an arm’s length transaction between knowl-
edgeable, willing parties, less any costs to sell. Costs to sell are incremental costs incurred to sell
the asset or cash-generating unit. Value in use is determined using the discounted cash flow method
or capitalized earnings method on the basis of the estimated future cash flows expected to arise
from the continuing use of the asset and its disposal.
The recoverable amount is generally determined separately for each asset. If it is not pos-
sible to determine the recoverable amount for an individual asset because it does not generate
cash inflows that are largely independent of the cash inflows from other assets, it is determined on
the basis of a group of assets that constitutes a cash-generating unit.
If the carrying amount of an asset or cash-generating unit exceeds its recoverable amount,
an impairment loss is recognized to account for the difference. Impairment losses are recognized
through profit or loss in the item amortization of intangible assets and depreciation of property,
plant and equipment, leased assets and investment property.