SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank Notes to the Consolidated Financial Statements F-16
Annual Report 2010 on Form 20-F 01 – Significant Accounting Policies
Any retained investment is accounted for as a financial instrument as described in the section entitled
‘Financial Assets and Liabilities’ as follows.
Foreign Currency Translation
The consolidated financial statements are prepared in euros, which is the presentation currency of the Group.
Various entities in the Group use a different functional currency, being the currency of the primary economic
environment in which the entity operates.
An entity records foreign currency revenues, expenses, gains and losses in its functional currency using the
exchange rates prevailing at the dates of recognition.
Monetary assets and liabilities denominated in currencies other than the entity’s functional currency are translated
at the period end closing rate. Foreign exchange gains and losses resulting from the translation and
settlement of these items are recognized in the consolidated statement of income as net gains (losses) on
financial assets/liabilities at fair value through profit or loss in order to align the translation amounts with those
recognized from foreign currency related transactions (derivatives) which hedge these monetary assets and
liabilities.
Nonmonetary items that are measured at historical cost are translated using the historical exchange rate at the
date of the transaction. Translation differences on nonmonetary items which are held at fair value through profit
or loss are recognized in profit or loss. Translation differences on available for sale nonmonetary items (equity
securities) are included in other comprehensive income. Once the available for sale nonmonetary item is sold,
the related cumulative translation difference is transferred to the consolidated statement of income as part of
the overall gain or loss on sale of the item.
For purposes of translation into the presentation currency, assets, liabilities and equity of foreign operations are
translated at the period end closing rate, and items of income and expense are translated into euro at the rates
prevailing on the dates of the transactions, or average rates of exchange where these approximate actual rates.
The exchange differences arising on the translation of a foreign operation are included in other comprehensive
income. For foreign operations that are subsidiaries the amount of exchange differences attributable to any
noncontrolling interest is recognized directly in noncontrolling interests.
Upon disposal of a foreign subsidiary and associate operation (which results in loss of control or significant
influence over that operation) the total cumulative exchange differences recognized in other comprehensive
income are reclassified to profit or loss.
Interest, Fees and Commissions
Revenue is recognized when the amount of revenue and associated costs can be reliably measured, it is
probable that economic benefits associated with the transaction will be realized, and the stage of completion of
the transaction can be reliably measured. This concept is applied to the key revenue generating activities of the
Group as follows.
Net Interest Income – Interest from all interest-bearing assets and liabilities is recognized as net interest income
using the effective interest method. The effective interest rate is a method of calculating the amortized
cost of a financial asset or a financial liability and of allocating the interest income or expense over the relevant
period using the estimated future cash flows. The estimated future cash flows used in this calculation include
those determined by the contractual terms of the asset or liability, all fees that are considered to be integral to
the effective interest rate, direct and incremental transaction costs, and all other premiums or discounts.