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Annual Report

Additional Balance Sheet Disclosures in accordance with IFRS 7
(Financial Instruments)

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CARRYING AMOUNT OF FINANCIAL INSTRUMENTS BY MEASUREMENT CATEGORY UNDER IAS 39

 

 

 

 

€ million

 

Dec. 31, 2010

 

Dec. 31, 2009

*

Prior-year figures adjusted.

Financial assets at fair value through profit or loss

 

2,605

 

574

Loans and receivables*

 

80,985

 

73,631

Available-for-sale financial assets*

 

6,143

 

3,875

Financial liabilities at fair value through profit or loss

 

665

 

565

Financial liabilities measured at amortized cost

 

92,110

 

90,944

In order to harmonize the IAS 39 measurement categories and the IFRS 7 classes within the Volkswagen Group, cash, cash equivalents and time deposits in the amount of €18,670 million (previous year: €20,539 million) were reassigned from the available-for-sale financial assets category to the loans and receivables category and from the at fair value class to the measured at amortized cost class in fiscal year 2010. The items are no longer allocated to the three levels in the fair value hierarchy. The prior-period figures have been adjusted accordingly.

RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS

The following table shows the reconciliation of the balance sheet items to the relevant classes of financial instruments, broken down by carrying amount and fair value of the financial instruments.

The fair value of financial instruments measured at amortized cost, such as receivables and liabilities, is calculated by discounting using a market rate of interest for a similar risk and matching maturity. For reasons of materiality, the fair value of current balance sheet items is deemed to be their carrying amount.

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RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2009

 

 

 

 

Measured at fair value

 

Measured at amortized cost

 

Not within scope of IFRS 7

 

Other – not financial instruments

 

Balance Sheet item at Dec. 31, 2009

€ million

 

Carrying amount

 

Carrying amount

 

Fair value

 

Carrying amount

 

Carrying amount

 

 

*

Prior-year figures adjusted.

Noncurrent assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity-accounted investments

 

 

 

 

10,385

 

 

10,385

Other equity investments

 

 

543

 

543

 

 

 

543

Financial services receivables

 

 

33,174

 

33,264

 

 

 

33,174

Other receivables and financial assets

 

1,858

 

920

 

941

 

 

969

 

3,747

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

 

5,692

 

5,692

 

 

 

5,692

Financial services receivables

 

 

27,403

 

27,403

 

 

 

27,403

Other receivables and financial assets

 

1,349

 

2,352

 

2,352

 

 

2,226

 

5,927

Marketable securities

 

3,330

 

 

 

 

 

3,330

Cash, cash equivalents and time deposits*

 

 

20,539

 

20,539

 

 

 

20,539

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent financial liabilities

 

 

36,993

 

38,808

 

 

 

36,993

Other noncurrent liabilities

 

703

 

1,148

 

1,148

 

 

1,177

 

3,028

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current financial liabilities

 

 

40,606

 

40,606

 

 

 

40,606

Trade payables

 

 

10,225

 

10,225

 

 

 

10,225

Other current liabilities

 

718

 

2,178

 

2,178

 

 

5,340

 

8,237

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RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2010

 

 

 

 

Measured at fair value

 

Measured at amortized cost

 

Not within scope of IFRS 7

 

Other – not financial instruments

 

Balance Sheet item at Dec. 31, 2009

€ million

 

Carrying amount

 

Carrying amount

 

Fair value

 

Carrying amount

 

Carrying amount

 

 

Noncurrent assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity-accounted investments

 

 

 

 

13,528

 

 

13,528

Other equity investments

 

 

640

 

640

 

 

 

640

Financial services receivables

 

 

35,817

 

36,220

 

 

 

35,817

Other receivables and financial assets

 

3,595

 

2,592

 

2,612

 

 

1,333

 

7,519

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

 

6,883

 

6,883

 

 

 

6,883

Financial services receivables

 

 

30,164

 

30,164

 

 

 

30,164

Other receivables and financial assets

 

921

 

2,767

 

2,767

 

 

2,918

 

6,605

Marketable securities

 

5,501

 

 

 

 

 

5,501

Cash, cash equivalents and time deposits

 

 

18,670

 

18,670

 

 

 

18,670

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent financial liabilities

 

 

37,159

 

38,665

 

 

 

37,159

Other noncurrent liabilities

 

1,469

 

320

 

323

 

 

2,952

 

4,742

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current financial liabilities

 

 

39,852

 

39,852

 

 

 

39,852

Trade payables

 

 

12,544

 

12,544

 

 

 

12,544

Other current liabilities

 

1,193

 

2,495

 

2,495

 

 

6,939

 

10,627

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BALANCE SHEET ITEMS MEASURED AT FAIR VALUE*

€ million

 

Dec. 31, 2009

 

Level 1

 

Level 2

 

Level 3

*

Prior-year figures adjusted.

Financial assets at fair value through profit or loss

 

 

 

 

 

 

 

 

Derivatives

 

3,205

 

 

3,007

 

198

 

 

 

 

 

 

 

 

 

Available-for-sale financial assets

 

 

 

 

 

 

 

 

Marketable securities

 

3,332

 

3,320

 

12

 

Financial assets measured at fair value

 

6,537

 

3,320

 

3,019

 

198

 

 

 

 

 

 

 

 

 

Financial liabilities at fair value through profit or loss

 

 

 

 

 

 

 

 

Derivatives

 

1,421

 

 

1,357

 

65

Financial liabilities measured at fair value

 

1,421

 

 

1,357

 

65

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€ million

 

Dec. 31, 2010

 

Level 1

 

Level 2

 

Level 3

Financial assets at fair value through profit or loss

 

 

 

 

 

 

 

 

Derivatives

 

4,515

 

 

2,397

 

2,118

 

 

 

 

 

 

 

 

 

Available-for-sale financial assets

 

 

 

 

 

 

 

 

Marketable securities

 

5,501

 

5,491

 

10

 

Financial assets measured at fair value

 

10,016

 

5,491

 

2,407

 

2,118

 

 

 

 

 

 

 

 

 

Financial liabilities at fair value through profit or loss

 

 

 

 

 

 

 

 

Derivatives

 

2,662

 

 

2,267

 

396

Financial liabilities measured at fair value

 

2,662

 

 

2,267

 

396

The allocation of fair value to the three levels in the fair value hierarchy is based on the availability of observable market prices in an active market. Level 1 is used to report the fair value of financial instruments, for example marketable securities, for which a quoted price is available. Fair values in Level 2, e.g. of derivatives, are measured on the basis of market inputs such as exchange rates or yield curves using market-based valuation techniques. Level 3 fair values are calculated using valuation techniques that do incorporate inputs that are not directly observable in active markets. In the Volkswagen Group, Level 3 fair values comprise long-term commodity futures because the prices available on the market must be extrapolated for measurement purposes. Options on equity instruments are also reported in Level 3.

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CHANGES IN BALANCE SHEET ITEMS MEASURED AT FAIR VALUE BASED ON LEVEL 3

€ million

 

Financial assets measured at fair value

 

Financial liabilities measured at fair value

Balance at Jan. 1, 2009

 

 

64

Total comprehensive income

 

184

 

37

recognized in profit or loss

 

42

 

5

recognized in other comprehensive income

 

142

 

32

Additions (purchases)

 

48

 

65

Transfers into Level 2

 

–34

 

–27

Balance at Dec. 31, 2009

 

198

 

65

 

 

 

 

 

Total gains or losses recognized in profit or loss

 

42

 

5

Net other operating expense/income

 

 

of which attributable to assets/liabilities held at the reporting date

 

 

Financial result

 

42

 

5

of which attributable to assets/liabilities held at the reporting date

 

11

 

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€ million

 

Financial assets measured at fair value

 

Financial liabilities measured at fair value

Balance at Jan. 1, 2010

 

198

 

65

Total comprehensive income

 

1,969

 

–174

recognized in profit or loss

 

1,953

 

–173

recognized in other comprehensive income

 

16

 

0

Additions (purchases)

 

 

163

Transfers into Level 2

 

–48

 

–5

Balance at Dec. 31, 2010

 

2,118

 

396

 

 

 

 

 

Total gains or losses recognized in profit or loss

 

1,953

 

–173

Net other operating expense/income

 

 

of which attributable to assets/liabilities held at the reporting date

 

 

Financial result

 

1,953

 

–173

of which attributable to assets/liabilities held at the reporting date

 

1,957

 

–168

The transfers out of Level 3 into Level 2 comprise commodity futures for which observable quoted prices are available for measurement purposes due to the decline in their remaining maturities; consequently, no extrapolation is required.

Commodity prices are the key risk variable for the fair value of commodity futures. Sensitivity analyses are used to present the effect of changes in commodity prices on profit and equity.

If commodity prices for commodity futures classified as Level 3 had been 10% higher (lower) as of December 31, 2010, profit would have been €7 million (previous year: €3 million) and equity €51 million (previous year: €54 million) higher (lower).

The key risk variable for measuring options on equity instruments held by the Company is the relevant enterprise value. Sensitivity analyses are used to present the effect of changes in risk variables on profit.

If the assumed enterprise values had been 10% higher, profit would have been €429 million (previous year: €15 million) higher. If the assumed enterprise values had been 10% lower, profit would have been €459 million (previous year: €15 million) lower.

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CHANGES IN CREDIT RISK VALUATION ALLOWANCES ON FINANCIAL ASSETS

 

 

€ million

 

Specific valuation allowances

 

Portfolio-based valuation allowances

 

2010

 

Specific valuation allowances

 

Portfolio-based valuation allowances

 

2009

Balance at Jan. 1

 

1,847

 

568

 

2,415

 

1,155

 

619

 

1,774

Currency and other changes

 

53

 

26

 

79

 

37

 

18

 

56

Changes in consolidated Group

 

7

 

 

7

 

 

 

Additions

 

923

 

155

 

1,078

 

1,348

 

118

 

1,467

Utilization

 

483

 

 

483

 

347

 

 

347

Reversals

 

337

 

124

 

461

 

249

 

286

 

535

Reclassification

 

–60

 

60

 

 

–98

 

98

 

0

Balance at Dec. 31

 

1,951

 

685

 

2,636

 

1,847

 

568

 

2,415

The valuation allowances mainly relate to the credit risks associated with the financial services business.

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