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noteS TO THE CONSolidated FINANCIAL StatementS
conSolidated FINANCIAL StatementS FOR THE Year ENDED 31 DECEMBER 2011
PALFINGER receives grants for research and further training in various countries. These are recognized as other
operating income in the time periods in which the expense which is to be compensated for by the grant is
incurred.
A government grant is not recognized until there is reasonable assurance that the Company will comply with the
conditions attaching to it and that the grant will be received.
Leases
In line with IAS 17, the allocation of a leased asset to the lessor or lessee is based on the transfer of all material
risks and rewards incidental to ownership of the asset.
Assets obtained through finance leases are capitalized at the fair value or lower present value of the minimum
lease payments at the acquisition date from the viewpoint of the lessee, and depreciated over their useful lives.
The capitalized value of assets corresponds to the present value of the lease payments outstanding at the balance
sheet date.
Assets obtained through operating leases are allocated to the lessor. The lessee recognizes the lease payments as
an expense in equal instalments over the term of the lease.
Borrowing costs
Borrowing costs that are attributable to the acquisition or production of a qualifying asset are capitalized as part
of the cost of the asset.
(3) INVEStment PROPERTY
Investment property includes land or buildings held to earn rentals or for capital appreciation rather than for use
in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of
business.
Investment property is measured at cost less accumulated depreciation. Depreciation on buildings is performed
on a straight-line basis over a period ranging from 20 to 50 years. The fair value of investment property is
determined on the basis of expert opinions that are prepared internally and using an income-cost approach.
(4) INVENTORIES
Inventories are assets held for sale as part of the normal operating business (finished goods and merchandise),
assets that are still in the process of production (work in progress) or that are consumed as part of the manufacturing
of products or the rendering of services (materials and production supplies).
Inventories are valued at acquisition or production cost or the lower net realizable value at the balance sheet
date. The valuation of materials and production supplies as well as goods for resale is carried out in accordance
with the moving average cost method. Write-downs are made where the net realizable value is lower than the
carrying amount. The production costs of work in progress and finished goods are determined on the basis of
standard production costs and, besides direct materials and manufacturing costs, also contain appropriate shares
of materials and manufacturing overheads as well as administrative expenses relating to manufacturing. The
standard production costs are reviewed regularly and adjusted to current conditions if necessary.
palfinger Annual Report 2011
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