Porsche 2011 Annual Report Download - page 168

If pension obligations are funded by plan assets, the obligation and the assets are offset. The company
applies the corridor method to measure the pension obligations and determine the pension cost. Actuarial
gains and losses from a pension plan are recognized as income or expense when the net cumulative
unrecognized actuarial gains and losses of the plan exceed 10% of the defined benefit obligation or 10% of the
fair value of existing plan assets of the prior year (corridor method). The amount exceeding the corridor is
recognized by allocation to the average remaining working lives of the employees. Past service cost is
recognized on a straight-line basis over the average period until the benefits become vested. To the extent that
the benefits are already vested immediately following the introduction of, or changes to, a pension plan, past
service cost is recognized immediately in profit or loss. Service cost is presented as personnel expense while
the interest expense of the obligation and return on plan assets are presented in finance costs.
Other provisions
Other provisions are recognized if a past event has led to a current legal or constructive obligation to
third parties which is expected to lead to a future outflow of resources that can be estimated reliably.
Provisions are generally measured at the expected settlement amount taking into account all identifiable risks.
The settlement amount is calculated using best estimates, including estimated cost increases.
Non-current provisions are stated at their present value at the reporting date. The interest rate used is
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
liability. The interest expense resulting from the unwinding of the discount is presented in finance costs.
Provisions are not offset against reimbursement claims from third parties. Reimbursement claims are
recognized separately in other assets if it is virtually certain that the Porsche SE group will receive the
reimbursement when it settles the obligation.
Accruals are not presented under provisions, but under trade payables or other liabilities, depending
on their nature.
Liabilities
Non-current liabilities are recognized at amortized cost. Differences between their historical cost and
their repayment amount are accounted for using the effective interest method. Current liabilities are recognized
at their repayment or settlement value.
Revenue and expenses
Revenue is generally recognized to the extent that it is probable that the economic benefits will flow to
the group and the revenue can be reliably measured.
Revenue from the sale of products is generally not recognized until the point in time when the
significant opportunities and risks associated with ownership of the goods and products being sold are
transferred to the buyer. Revenue is reported net of discounts, customer bonuses and rebates.
168 FINANCIALS