Accounting standards

Effects of new and amended IFRSs

Volkswagen AG has adopted all accounting pronouncements required to be applied starting in fiscal year 2013.

The amendment to IAS 36 (2013) “Recoverable Amount Disclosures for Nonfinancial Assets” was voluntarily applied early in the Volkswagen consolidated financial statements in the current fiscal year. The amendments clarify and correct the disclosure requirements for recoverable amount under IFRS 13.

IAS 1R revises the way that the reconciliation of comprehensive income for the period is presented. It requires items of other comprehensive income to be presented separately by items that will never be reclassified to profit or loss and items that may be reclassified subsequently to profit or loss if certain conditions are met. In addition, the related tax effects must be allocated to these two groups of items. Volkswagen AG has modified the statement of comprehensive income in these consolidated financial statements in line with this. The other amendments to IAS 1 do not affect the presentation of the Volkswagen Group’s net assets, financial position and results of operations.

The statement of changes in equity was also modified in this context. In these consolidated financial statements, the retained earnings are composed of other retained earnings and actuarial gains and losses. The other items are classified as “Other reserves”.

IAS 19R changes the way employee benefits are accounted for. This results in the following changes in particular in Volkswagen AG’s consolidated financial statements:

Bonus payments for partial retirement agreements are attributed to the periods of service over the accumulation period in the block model used in the Volkswagen Group.

Past service cost for defined benefit obligations is recognized directly in profit or loss.

The defined benefit obligation and plan assets are discounted using the same discount rate (net interest approach).

The following tables present the material effects of applying IAS 19R:

On August 1, 2012, Porsche Automobil Holding SE, Stuttgart (Porsche SE), contributed its holding company operating business to Volkswagen AG by way of singular succession in the course of a capital increase with a mixed noncash contribution. Volkswagen accounted for this transaction in accordance with IFRS 3. Partial retirement obligations were also assumed in this connection. The changes resulting from the application of IAS 19R must be applied retrospectively, i.e. as if the new accounting policy had always been applied. For this reason, the adjustment resulting from application of IAS 19R to the recognition and measurement of the partial retirement obligations must be charged to goodwill at the acquisition date. This resulted in the following adjustments as of August 1, 2012: deferred tax assets were reduced by €20 million, intangible assets were reduced by €46 million and liabilities and provisions were reduced by €66 million.

The other amendments to IAS 19 do not materially affect the presentation of the net assets, financial position and results of operations in Volkswagen AG’s consolidated financial statements.

The following tables present the effects of retaining IAS 19 (2008) on the balance sheet as of December 31, 2013 as well as on the income statement and the statement of comprehensive income in fiscal year 2013:

IFRS 13 sets out general requirements for measuring fair value in a separate standard. Volkswagen therefore applies the requirements of IFRS 13 governing fair value measurement. Fair value measurement did not materially affect the presentation of the net assets, financial position and results of operations in Volkswagen AG’s consolidated financial statements. Furthermore, IFRS 13 specifically affects the notes to the consolidated financial statements. Information has been added about the levels of the fair value hierarchy within which certain assets and liabilities are categorized, along with further explanatory notes on fair value measurement.

The amendments to IFRS 7 result in additional disclosures relating to offsetting financial assets and financial liabilities. In particular, the additional reporting requirements affect the disclosure of netting arrangements under which the right of set-off is contingent on specific future events.

The other accounting pronouncements required to be applied for the first time in fiscal year 2013 are insignificant for the presentation of the net assets, financial position and results of operations in Volkswagen AG’s consolidated financial statements.

New and amended IFRSs not applied

In its 2013 consolidated financial statements, Volkswagen AG did not apply the following accounting pronouncements that have already been adopted by the IASB, but were not yet required to be applied for the fiscal year.