Porsche 2010 Annual Report Download - page 158

Financials
156
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. Financial assets are
generally derecognized when the contractual right to the cash flows expires or this right is transferred
to a third party. Financial liabilities are derecognized when the obligation underlying the liability has been
cancelled or extinguished.
Non-derivative financial instruments
Financial instruments accounted for at fair value include financial instruments held for trad-
ing and financial assets classified as at fair value through profit or loss upon initial recognition.
Gains and losses from the subsequent measurement are recognized in profit or loss. In the Porsche
SE group, financial instruments in the category held for trading include derivative financial instru-
ments only. The discontinued operations’ financial instruments classified upon initial recognition as
financial assets at fair value through profit or loss related to index certificates. Classification in this
category reflects the risk management and investment strategy. No financial assets or liabilities
were classified as at fair value through profit or loss upon initial recognition in the short fiscal year.
Any financial instruments held to maturity are accounted for at amortized cost. Gains and
losses from the subsequent measurement are recognized in profit or loss. The Porsche SE group
did not hold any financial instruments in the category as of the reporting date.