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Development costs must meet several criteria to
be recognized as an intangible asset. Technical
and financial resources must be available to en-
sure the completion of the development, and
the costs attributed to the development must
be reliably measured. Due to rapid techno-
logical changes, the required proof of future
economic benefits could not be sufficiently
supported and therefore no development costs
could be capitalized as intangible assets in
the reporting period. The assessment of wheth-
er these recognition criteria are met requires
significant management judgment.
When assessing inventories, estimates for
their recoverability based on the expected
consumption of the corresponding item are
considered. The valuation adjustments for
inventories are determined for each item using
a coverage analysis. The parameters are
checked annually and modified if necessary.
Changes in sales or other circumstances
can accordingly lead to an adjustment of the
book value (refer to note 18, page 94).
For defined benefit plans, actuarial valua-
tions which are the basis for the employee
benefit assets and liabilities in the balance
sheet are carried out regularly. These
calculations are based on statistical and
actuarial assumptions. In particular, the
present value of the defined benefit obligation
is affected by assumptions such as discount
rate, expected future salary growth and the
life expectancy. Other assumptions for the
valuation are derived from statistical data such
as mortality tables and staff turnover rates.
Actuaries are independent from Autoneum.
Assumptions may differ significantly from actual
results. These deviations can ultimately have
an effect on the employee benefit assets or
liabilities in future periods (refer to note 25,
page 101).
In the course of the ordinary operating ac-
tivities of Autoneum Group, obligations from
guarantee and warranty, litigation and tax risk,
and environmental risk can arise. Provisions for
these obligations are measured on the basis
of estimated future cash outflow. The outcome
of these business transactions may result in
claims against Autoneum that may be below or
above the related provisions. Provisions for
obligations from guarantee and warranty are
recognized when damage has occurred and
the related cash outflow can be estimated relia-
bly, but a material uncertainty concerning
the kind of damage and the kind of compensa-
tion exists. Provisions for litigation and tax
risk comprise complex cases that include materi-
al uncertainties. Environmental provisions are
recognized for the expected costs for the clean-
up and reconstruction of contaminated sites
that are interdependent of many uncertainties,
such as Autoneum’s share of the cost or the
applicable approach for determining these costs.
The financial impact of these cases for future
periods can only be estimated, because uncer-
tainties relating to amount and date of cash
outflow exist (refer to note 26, page 106).
Assumptions in relation to income taxes in-
clude interpretations of the tax regulations in
place in the relevant countries. The adequacy of
these interpretations is assessed by the tax
authorities. This can result, at a later stage, in
changes in the income tax expenses. To deter-
mine whether a deferred income tax asset on tax
loss carryforwards may be recognized requires
judgment in assessing whether there will be fu-
ture taxable profits against which these tax
loss carryforwards can be offset (refer to note 11,
page 89).
1.3 Scope and methods of consolidation
The consolidated financial statements of
Autoneum Holding Ltd include the Company
and its subsidiaries. Subsidiaries are
entities controlled by the Group. The Group
controls an entity when it is exposed to, or
has rights to, variable returns from its involve-
71
Autoneum
Financial Report 2016
Consolidated Financial Statements