Annual Report 2010 - Knorr-Bremse AG.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 141
Deferred taxes
Deferred taxes as defined under §§ 274 and 306 of the German Commercial Code (HGB), resulting from
temporary differences between the amount stated in the tax accounts of individual group companies
and the amount stated in the consolidated balance sheet (including differences arising as a result of
accounting and valuation adjustments or during the consolidation process), are netted wherever possible,
in accordance with legal requirements. In the individual balance sheets prepared according to the
uniform principles of accounting and valuation applied to the Group (”Financial statements II“), the option
to capitalize assets to the amount of probable tax relief in the following years is used in individual
cases. The calculation of deferred taxes is based on the tax rates that are expected to be valid at the time
of their realization.
Deferred taxes on losses carried forward are capitalized in individual cases, where there is sufficient
probability that the tax benefits can be realized. At each balance sheet date, the book value of deferred
tax assets is reviewed and, if necessary, adjusted as appropriate.