Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

1.14 Revenue and expense recognition
Revenue comprises the fair value of consideration received or receivable for the goods sold and services provided, net of value-added tax,
rebates and discounts.
Sales of goods are recognised only when the goods have been delivered, that is, when the significant risks and rewards have passed to the
customer, the sales price is agreed or determinable and receipt of payment can be assumed. This corresponds generally to the date when
the products are provided to dealers outside the Company, or to the delivery date in the case of direct sales to consumers.
Income from the license fees is recognised in accordance with the substance of the relevant agreements. Dividend income is generally
recognised on the date at which the dividend is legally approved.
Costs of goods sold include production costs, costs of goods purchased for resale, and additions to warranty provisions. Research and
development costs not eligible for capitalisation in the period and amortisation of capitalised development costs are likewise carried
under cost of sales.
Distribution expenses include personnel and material costs, and depreciation and amortisation applicable to the distribution function, as
well as the costs of shipping, advertising, sales promotion, market research and customer service.
Administrative expenses include personnel costs and overheads as well as depreciation and amortisation applicable to administrative
functions.
1.15 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.
1.16 Investment incentives
The Company recognizes deferred income tax assets on unused investment tax credits against deferred tax income in the income
statement to the extent that it is probable that future taxable profits will be available against which the unused tax credits can be utilized.
Subsidies of entrepreneurial activities and of employee training and retraining costs are recognized as income over the periods necessary
to match them with the related costs which they are intended to compensate, on a systematic basis.
1.17 Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that
are different from those of other business segments. A geographical segment is engaged in providing products or services within
a particular economic environment that are subject to risks and returns that are different from those of segments operating in other
economic environments.
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