Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

1.3 Details of the Group
In addition to ŠKODA AUTO a.s. located in Mladá Boleslav, the consolidated financial statements include all significant subsidiaries and
associated undertakings.
See Company information note for the Company’s details.
Subsidiaries are all companies, in which the Company is able, directly or indirectly, to control financial and operating policies, which is the
authority usually connected with holding majority voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another entity. The controlled companies
(“subsidiaries”) are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date
that control of the Group ceases.
The significant subsidiaries of ŠKODA AUTO a.s. are as follows:
– ŠkodaAuto Deutschland GmbH (100%),
– ŠKODA AUTO Slovensko, s.r.o. (100%),
– Skoda Auto Polska S.A. (51%),
– Skoda Auto India Private Ltd. (100%)
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. OOO VOLKSWAGEN RUS. is a significant associate of ŠKODA AUTO a.s.
1.4 Consolidation principles
The subsidiaries are consolidated by the full-scope consolidation method. Assets and liabilities of the companies of the Group included in
the consolidated financial statements are recognised in accordance with the uniform accounting policies used within the Group.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the
income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Investments in associates are accounted for using the equity accounting and are initially recognised at cost. The Group’s investment in
associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.
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