October 22nd, 2013
[International Accounting and financial statement]

Case 2 “Volkswagen Group”
Questions and Answers
1. Based on the information provided in the chapter, describe the basic features of German accounting at the time Volkswagen adopted IAS. What development factors cause these features?
APPUNTI DA FARE
IAS compliant
In 2001 first consolidated financial statement
All mandatory requirements fulfilled
IAS 12 and IAS 39 already fulfilled in 2000 financials
Clear and fair view of net financial positions, asset classification in the book, earning indicators, etc.
All in euro million
Method used: accordance with cost of sales
Disclosure of contingent assets and liabilities side
Pre-consolidation assumptions ok
IAS standard requires certain categories of financial instruments are classified at fair value; for the German accounting classification all financial institutions need to measured their assets held for trading at fair value.
Treasury shares offset against capital and reserves: they refer to all shares a company may buy back its own non-redeemable shares ad hold them in Treasury, as foreseen by the regulation. An important thing to underline is that the nominal value of these treasury shares needs to be kept at least at 10% higher than the value of issued share capital. That’s why they are offset against capital (in case their nominal value goes down) or reserves being them included/classified in the company balance sheet under shareholder’s equity. According to German code principles as well as to IAS standards, treasury shares should be deducted from the shareholder’s equity but these shares cannot be shown as an asset and they do not have any impact on the income statement. Moreover, according to German principles, reserves need to be deducted by the cost of the treasury shares purchased.
Receivables and payables denominated at foreign currencies (IAS 39) are not accounted at the imparity principle, but at the middle rate on the balance sheet date.