Porsche 2011 Annual Report Download - page 170

provisions and contingent liabilities (see note [22] on litigation in particular) and the recoverability of
receivables. In individual cases, amounts realized may differ from the estimates. The carrying amounts of the
assets and liabilities affected by estimates can be seen in the breakdowns of the individual balance sheet items.
Key sources of judgment are the classification of financial instruments as well as determining the
parameters underlying their measurement (see section 4.2.2 in note [21]), deciding which indicators are
indicative of an impairment of associates and joint ventures (see the section “Equity accounting” under
“Consolidation principles”) as well as the recognition of provisions and contingent liabilities (see note [22] 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 financial 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 forecasted cash flows and discount rates. Other factors which may cause variances from expectations are
the development of enterprise 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 provisions.
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 other than as described under subsequent events. Judgments and estimates by
management included assumptions that are described in the forecast report as part of Porsche SE’s group
management report for the 2011 reporting period.
170 FINANCIALS