ANNUAL REPORT 2008 | 2009 - SinnerSchrader AG

Consolidated Financial Statements of SinnerSchrader AGNotes552.8 Financial InstrumentsAccording to IAS 39, a financial instrument is a contract which leads to the creation of a financial asset for onecompany and the creation of a financial liability or an equity capital instrument for another.In accordance with IAS 39, when they are first reported, financial instruments are to be posted with thecurrent value to be ascribed to them, which usually corresponds to the procurement costs. Transaction costsare included in the first evaluation if no evaluation for fair value with an effect on profits takes place. Purchasesand sales of financial instruments should be posted as of the trading day.With respect to the subsequent evaluation, a distinction is made between various categories of financial instruments,including financial instruments held for trading purposes, financial instruments to be held until they arefinally due, credits and claims submitted by the company, and financial instruments available for sale.Financial instruments with fixed payments or payments that can be determined and a fixed term that thecompany intends to hold until they are finally due, excluding credits and claims submitted by the company, areclassified as financial instruments to be held until they are finally due.All other financial instruments, excluding credits and claims submitted by the company, are classified as financialassets available for sale.Financial instruments held for trading purposes and financial assets available for sale are evaluated at thecurrent value without deduction of transaction costs in the subsequent evaluation. The current values are usuallyfound from reporting date prices on financial markets. Profits and losses from the evaluation at the current valueof financial instruments held for trading purposes shall be reported with an effect on profits. Profits and lossesfrom the evaluation of the current value of financial instruments available for sale shall be recorded directly in theshareholders’ equity with a neutral effect on profits until the financial instrument is sold, withdrawn or otherwisedispatched, or as soon as a permanent value reduction has been identified for it. Where necessary, profits andlosses recorded directly in the shareholders’ equity are posted in the item “Other Accrued Expenses”.Financial instruments to be held to maturity shall be assessed at their continued procurement costs using theeffective interest method.Financial instruments to be held to maturity with a remaining term of up to twelve months are posted in thecurrent assets. Financial assets available for sale are posted in the current assets if the company isplanning to sell them in the next twelve months.A financial asset is debited if the company loses the right to hold the contractual rights of which the financialasset is comprised. A financial liability is debited if the obligation upon which this liability is based is fulfilled,terminated or deleted.