Daimler Annual Report 2011 - Alle jaarverslagen

Pensions and similar obligations. The measurement of
defined benefit plans for pensions and other post-employment
benefits (medical care) in accordance with IAS 19 Employee
Benefits is based on the projected unit credit method. For the
valuation of defined post-employment benefit plans, differences
between actuarial assumptions used and actual developments
and changes in actuarial assumptions result in actuarial
gains and losses, which generally have to be amortized in
future periods in accordance with the corridor approach.
This approach requires partial amortization of actuarial gains
and losses in the following year with an effect on earnings
if the unrecognized gains and losses exceed 10% of the greater
of (1) the present value of the defined post-employment
benefit obligation or (2) the fair value of the plan assets. In such
cases, the amount of amortization recognized in profit or
loss by the Group is the resulting excess divided by the average
remaining service period of active employees expected to
receive benefits under the plan.
Plan assets invested to cover defined pension benefit
obligations and other post-employment benefit obligations
(medical care) are measured at fair value and offset against
the corresponding obligations. Plan assets are recognized
in the consolidated statement of income with their expected
returns with an effect on earnings (see also Note 22).
Expenses resulting from the compounding of pension benefit
obligations and other post-employment benefit obligations
as well as the expected returns on plan assets are presented
within interest expense and interest income. The amorti ­
zation of unrecognized actuarial gains and losses is also included
in these line items. Other expenses resulting from providing
pension benefits and other post-employment benefits are allocated
to the functional costs in the consolidated statement
of income.
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized when the curtailment
or settlement occurs.
The provision for expected warranty costs is recognized
when a product is sold, upon lease inception, or when a new
warranty program is initiated. Estimates for accrued warranty
costs are primarily based on historical experience.
Daimler records the fair value of an asset retirement obligation
from the period in which the obligation is incurred.
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed
by a segment or business unit or the manner in which business
is conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due
to the termination of agreements with suppliers and dealers.
Restructuring provisions are recognized when the Group
has a detailed formal plan that has either commenced implementation
or been announced.
Share-based payment. Share-based payment comprises
cash-settled liability awards and equity-settled equity awards.
The fair value of equity awards is generally determined by
using a modified Black-Scholes option pricing model at grant
date and represents the total payment expense to be recognized
during the service period with a corresponding increase
in equity (paid-in capital).
Liability awards are measured at fair value at each balance
sheet date until settlement and are classified as provisions.
The expense of the period comprises the addition to and/or
the reversal of the provision between two balance sheet dates
and the dividend equivalent paid during the period, and is
included in the functional costs.
Presentation in the consolidated statement of cash
flows. Interest and taxes paid as well as interest and
dividends received are classified as cash provided by/used
for operating activities. Dividends paid are shown in cash
provided by/used for financing activities.
Provisions for other risks and contingent liabilities.
A provision is recognized when a liability to third parties has
been incurred, an outflow of resources is probable and
the amount of the obligation can be reasonably estimated.
The amount recognized as a provision represents the best
estimate of the obligation at the balance sheet date. Provisions
with an original maturity of more than one year are discounted
to the present value of the expenditures expected
to settle the obligation at the end of the reporting period.
Provisions are regularly reviewed and adjusted as further information
becomes available or circumstances change.
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