Porsche 2011 Annual Report Download - page 164

Loans and receivables, held-to-maturity financial instruments and financial liabilities are measured at
amortized cost unless they are related to hedging instruments. In particular, these include other financial
receivables, financial guarantees, trade payables, financial liabilities and other financial liabilities.
With regard to financial guarantees, the Porsche SE group is required to make specified payments if a
debtor fails to make payment when due. Financial guarantees are presented on a net basis. The compensation
paid for assumption of the liability is not recognized before it is due. It is presented as other receivables and
assets or other liabilities. Liabilities are not recognized until the utilization of a financial guarantee becomes
probable. No liability had to be recognized in the current fiscal year or in the comparative period.
Financial assets are subject to an impairment test if there is objective evidence that the asset is
permanently impaired. An impairment loss is immediately recorded as an expense.
Specific valuation allowances are recognized for individually significant receivables by applying uniform
guidelines and are measured at the amount of incurred losses. Indicators of a potential impairment include
delayed payments over a certain period of time, the institution of enforcement measures, the threat of
insolvency or overindebtedness, application for or the opening of insolvency proceedings or the failure of
financial reorganization measures.
Valuation allowances are generally recognized in separate allowance accounts and give rise to
impairment losses that are recognized in profit or loss.
An impairment test is performed on the carrying amount of available-for-sale financial assets if there is
objective evidence of permanent impairment. In the case of equity instruments, evidence of impairment is
considered to exist, among other things, if the fair value decreases significantly below cost and the decrease in
fair value is prolonged. Where there is evidence of impairment, the cumulative loss of available-for-sale financial
instruments – measured as the difference between cost and their current fair value, less any impairment loss
previously recognized on that financial instrument in the income statement – is derecognized from equity and
recognized in the income statement. Any increase in the value of debt securities at a later date is accounted as
a reversal of the impairment loss recognized in profit or loss. In the case of equity instruments, reversals of
impairment losses are recognized directly in equity.
Derivative financial instruments
The derivative financial instruments recognized in the consolidated financial statements of Porsche SE
relate to an interest derivative that expired at the end of the 2011 reporting period and had been used to
hedge interest rate risks arising from existing liabilities. In addition, there is a put option for Porsche SE and a
call option for Volkswagen AG to Porsche SE’s remaining 50.1% of shares in Porsche Zwischenholding GmbH.
Derivative financial instruments are generally recognized at fair value through profit or loss and
remeasured at fair value in subsequent periods.
164 FINANCIALS