Porsche 2010 Annual Report Download - page 166

Financials
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Key sources of judgment are the classification of subgroups as discontinued operations,
the classification of financial instruments as well as determining the parameters underlying their
measurement (see section 4.2.3 in note [24]), deciding which indicators are indicative of an im-
pairment of items of property, plant and equipment, associates and joint ventures (see the section
on equity accounting under “Consolidation principles”) as well as the recognition of provisions and
contingent liabilities (see note [25] on litigation in particular). At the level of the investees, further
key sources of judgment include determining the starting point for the recognition of development
costs as an asset, the classification of leases as operating or finance leases and deciding which
indicators are indicative of an impairment of items of property, plant and equipment and leased
assets.
The judgments and estimates are based on assumptions that are derived from the current
information available. In particular, the circumstances given when preparing the consolidated finan-
cial statements and assumptions as to the expected future development of the global and industry
environment were used to estimate the company’s future business performance.
The estimates on which accounting is based are associated with uncertainties. This applies
above all to forecast cash flows and discount rates. Other factors which may cause variances from
expectations are the development of share prices and business values, a change in the estimate of
likelihood of certain option conditions occurring, and the outcome of litigation. Factors which may
cause variances from judgments and estimates at the level of associates and joint ventures include
new information about the buying behavior on the sales markets and in response to this changes in
planning, dependency on suppliers, in particular exclusive suppliers, developments in exchange
rates, interest rates and the price of raw materials as well as environmental and other legal provi-
sions.
In such cases, the assumptions, and if necessary the carrying amounts of the assets and
liabilities concerned, are adjusted accordingly. Prior to the date of authorization of the financial
statements by the executive board for issue to the supervisory board, there were no indications that
the carrying amounts of the assets and liabilities presented in the consolidated balance sheet would
require any significant adjustment in the following reporting period. Judgments and estimates by
management included assumptions that are described in the forecast report as part of Porsche
SE’s group management report for SFY 2010.