So ist das Leben /That's life / C'est la vie / Así es la vida / È la vita ...

Vorwerk & Co. KG’s accounting and valuation principles also
pertain to the consolidated financial statements. Valuations at
the akf group have been adopted unchanged pursuant to § 308
par. 2, sentence 2 HGB. The financial statements of non-
German subsidiaries drawn up in accordance with national
rules and regulations and departing from German legal
requirements have been adjusted in line with what is known as
the Handelsbilanz II (Type II Commercial Balance Sheet). The
valuation methods applied correspond to uniform valuation
as defined in § 308 par. 1 HGB. They remain unchanged from
those applied in the previous year. Purchased intangible assets
have been capitalized at acquisition cost less straight-line
amortization over their estimated useful lives on a pro rata
temporis basis.
The period for scheduled straight-line depreciation of goodwill
acquired against payment is 30 years.
In the case of tangible fixed assets and rental assets (allowing
for contractual periods and residual carrying values), where
the useful life is definite, the acquisition or manufacturing cost
has been depreciated on a straight-line basis over their estimated
useful lives. Manufacturing cost includes the individually
attributable costs from the consumption of goods and the
use of services as well as appropriate proportions of the
material and manufacturing overheads. Depreciation of
additions to the tangible fixed assets is generally effected on a
pro rata basis. If the fair market value of individual assets is
below their net carrying value, impairment charges are
recognized for permanent impairment.
Financial assets have been valued at acquisition cost and loans
at nominal value or at lower fair value.
The development of fixed assets is presented in the “Movements
in Fixed Assets” statement.
Inventories have been valued at acquisition cost or manufacturing
cost in accordance with the lower of market cost principle.
The acquisition cost of raw materials, supplies and
merchandise is calculated using the average cost method.
Consolidated Financial Statements / Explanatory Notes / 55
Apart from the direct costs, the manufacturing costs of the
finished goods and work in progress include only the adequate
portions of the material and manufacturing overheads
required and depreciation on the fixed assets caused by manufacturing.
Receivables and other assets have been shown at nominal
value less appropriate valuation allowances. Receivables from
customers from factoring and hire purchase transactions have
been reported at their present value less an individual or
general valuation allowances.
Marketable securities have been stated at acquisition cost or
the lower fair value prevailing as of the balance sheet date.
Liquid funds have been stated at nominal value.
Business transactions denominated in foreign currencies are
principally stated at the historical rate of exchange at the date
first recorded. Receivables, other assets, payables and liquid
funds in foreign currencies have been valued at the mean spot
exchange rate on the balance sheet date. In the case of foreign
currency items with a remaining term of more than one year,
the acquisition cost and realization principle have been
adopted. The requirements of § 340 h HGB have been applied
to the foreign currency translation of the assets and liabilities
of the companies of the akf group.
Revaluations have been made, if applicable, in accordance
with § 253 par. 5 HGB.
Provisions have been accrued with the application of prudent
business judgment at the expected settlement amount.
The provisions for pensions – calculated in accordance with
the actuarial projected unit credit method – have been generally
discounted over an estimated term of 15 years using
Heubeck 2005G Mortality Tables at the average market interest
rate of 5.14 percent, as published by the German Federal Bank.
The trend in salaries has been assumed to be 3.5 percent; in
pensions 1.1 percent. Fluctuation has been duly considered on
the basis of years of service and age-related probabilities.