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noteS TO THE CONSolidated FINANCIAL StatementS
conSolidated FINANCIAL StatementS FOR THE Year ENDED 31 DECEMBER 2011
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(5) CONTRACT MANUFACTURING
Receivables from projects and sales in this connection are recognized in accordance with the percentage of
completion. Projects are characterized by the fact that they are agreed on the basis of individual contractual terms
with fixed prices. The percentage of completion is determined by means of the cost-to-cost method. Reliable
estimates of the total costs of the contracts, the selling prices and the actual costs incurred are available on a
monthly basis. The estimated profits from the contracts are realized in proportion to calculated sales. When
applying the cost-to-cost method, sales and contract revenue are recognized in proportion of the manufacturing
costs actually incurred to the expected total costs. Losses are booked through the income statement as soon as
they are identified. For technological and financial risks that might occur during the remaining term of the project,
an individual estimate is made for each contract and the corresponding amounts are reported in estimated total
costs. Imminent losses resulting from the measurement of projects not yet invoiced are immediately recorded as
expenses. Imminent losses are realized if total contract costs are likely to exceed the contract revenue.
(6) FINANCIAL INStrumentS
Financial assets within the meaning of IAS 39 are classified either as held for trading, loans and receivables,
available for sale or hedging derivatives. PALFINGER determines the designation of its financial assets upon initial
recognition.
When they are recognized initially, financial assets are measured at fair value. In the case of financial investments
that are not recognized at fair value through the income statement, transaction costs are recognized as well.
These costs are directly allocable to the acquisition of the assets.
Acquisitions or sales of financial assets are recognized at the trade date.
The fair value of financial instruments is the amount for which a financial instrument could be exchanged
between knowledgeable, willing and independent parties in an arm’s length transaction. The fair value is
frequently identical to the market price, and therefore its calculation is based on market information available at
the balance sheet date. The values listed may diverge from values realized later due to varying determinants.
Market values are available for all derivative financial instruments and securities. The fair values for all other
financial instruments are determined on the basis of the discounted anticipated cash flows.
Securities and other shareholdings
Securities and other shareholdings are classified as available for sale according to IAS 39. They are measured at fair
value provided that a reliable fair value can be determined. Significant unrealized profits and losses are recognized in
equity. In the case of sales, the unrealized profit and/or loss that up to that point had been reported in the balance
sheet will be reported in the income statement under other financial expenses. Impairment losses are recorded in
the income statement. Impairment losses recorded for equity instruments are reversed in the balance sheet,
impairment losses recorded for debt instruments in the income statement.
Loans
Interest-bearing loans are classified as loans and receivables according to IAS 39. To the extent that no impairment
losses are required, they are reported at amortized cost, applying the effective interest method, and less any
impairment losses; non-interest bearing loans and interest-bearing loans with low rates of interest are discounted
accordingly. Impairment losses are reversed through the income statement.
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palfinger Annual Report 2011