PDF, 1.2 MB - Pfleiderer AG
PDF, 1.2 MB - Pfleiderer AG
PDF, 1.2 MB - Pfleiderer AG
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consolidated financial statements notes pfleiderer ag 81<br />
Inventories<br />
Inventories are valued at the lower of acquisition or manufacturing cost or market on the basis<br />
of individual values or the weighted averages method. Where justified, the first-in, first-out<br />
(FIFO) method is used. In principle, replacement costs are used to determine the market value.<br />
The ceiling for the determined market value is the net realizable value estimated under normal<br />
trading conditions, less expected costs of completion and sales. The floor for the determined<br />
market value is the net realizable value less a normal profit margin.<br />
Production costs include direct material and labor charges as well as applicable overheads<br />
resulting from the production process.<br />
Appropriate devaluations are carried out to cover all recognizable risks in inventory<br />
assets resulting from reduced salability or obsolescence. Discounts are applied to articles that<br />
are no longer readily marketable.<br />
Use of Financial Instruments<br />
The Group transacts business in numerous international currencies subject to exchange rate<br />
movements. <strong>Pfleiderer</strong> reduces its risk in different markets by hedging with derivative instruments.<br />
Market Value of Financial Instruments<br />
The market value of a financial instrument is the price at which a third party would be prepared<br />
to accept the rights and/or obligations arising from it. The Company allows financial instruments<br />
to be valued by the other contracting parties, as a rule banks.<br />
The carrying values of liabilities arising from finance leases are based on market prices<br />
for similar financing and largely correspond to the fair value. The same applies for financial<br />
assets.<br />
Intangible Assets<br />
Purchased intangible assets are capitalized at acquisition cost and amortized over their useful<br />
lives on a straight-line basis. In the case of intangible assets which can be identified as having<br />
been generated by the company itself, (apart from software) only those direct external costs<br />
that are involved in the generation of such assets are capitalized and amortized over their<br />
useful lives on a straight-line basis over a period of 3 to 5 years.<br />
Expenses incurred in connection with the purchase and own development of computer<br />
software used by the Company, including expenses involved in maintaining the operational<br />
condition of such software, are capitalized and amortized over the useful life of the software.
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