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The financial statements of German and foreign companies included in the scope of consolidation are prepared using uniform accounting policies. On principle, subsidiaries with a different balance-sheet date prepare interim financial statements as of the Group’s balance-sheet date.
Business combinations are reported according to the purchase method. Pursuant to this method, capital consolidation takes place by offsetting the purchase price against the acquired subsidiaries’ revalued prorated net assets at the time of acquisition. Subsidiaries’ identifiable assets, liabilities and contingent liabilities are measured at full fair value, regardless of the amount of the minority interest. Intangible assets are reported separately from goodwill if they are separable from the company or if they stem from a contractual or other right. In accordance with IFRS 3, no new restructuring provisions are recognized within the scope of the purchase price allocation. Acquisition costs not allocated to assets, liabilities, or contingent liabilities are capitalized as goodwill. Negative goodwill from first-time consolidation is included in income.
Capitalized goodwill is not amortized: it is tested for impairment once every year, or more frequently if there are indications of impairment. In the event of deconsolidation, residual carrying amounts of capitalized goodwill are taken into account when calculating income from disposals. If shares in a subsidiary are sold without losing the ability to control the subsidiary, the residual carrying amount of capitalized goodwill is derecognized proportionally with an effect on income.
Expenses and income as well as receivables and payables between consolidated companies are eliminated. Intra-group profits and losses are eliminated.
These consolidation principles also apply to investments accounted for using the equity method Glossary. In relation to these, however, goodwill is not reported separately: it is included in the recognized value of the investment. Such goodwill is not amortized either. If impairment losses on the equity value become necessary, we report such under income from investments accounted for using the equity method. The financial statements of investments accounted for using the equity method are also prepared using uniform accounting policies.
