Translation of "Wertberichtigung forderungen" in English

The determination of items such as depreciation expense and allowance for doubtful accounts are based on subjective factors.

To calculate these loss provisions, the receivables are grouped into homogeneous portfolios with comparable risk characteristics.

For the impairment of receivables, management must estimate the expected cash inflows from doubtful debtors.

An allowance for impairment is reversed only when the credit quality has improved such that there is reasonable assurance of timely collection of principal and interest in accordance with the original contractual terms of the claim agreement.

This was mainly due to production start-up costs of the newly established US subsidiary SQM (Superior Quality Manufacturing LLC), a loss by the subsidiary CarMedialab and a value adjustment on receivables in Dubai.

Provisions for doubtful accounts receivable are recognised in a special account. The amount of the provision is the difference between the asset's carrying amount and the present value of the estimated cash flows, discounted by using the effective yield method.

This also reflects investment costs for new markets such as Asia and France, production start-up costs of the newly established US subsidiary SQM (Superior Quality Manufacturing, LLC) in the amount of EUR 0.4 million, an unscheduled loss by the subsidiary CarMedialab in the amount of EUR 0.5 million, and a value adjustment for accounts receivable in Dubai amounting to EUR 0.6 million.

Furthermore, the Mail Order division generated income of EUR 1.2 million in the same quarter of the previous year by selling receivables and from the reversal of a write-down on receivables in the amount of EUR 0.4 million.

The reimposition of political sanctions led us to make an allowance for outstanding receivables in the Middle East, which resulted in a reduction in earnings.

The loss essentially derives from discounts on accounts receivable.

Impairment charges on receivables (€583 thousand) are recognised in the property operating costs.

Management creates allowances for doubtful accounts.

When is it possible and advisable to create statutory allowances for receivables?

Impairment charges on receivables are recognised in property operating costs.

This reflects lower other operating income, value adjustments on receivables from associated companies and goodwill amortization.

This withdrawal is included in the figure given below under 'Value adjustments in respect of loans and advances'.

Trade accounts receivable are stated at their nominal value less allowance for doubtful accounts.

Measuring assets net of valuation allowances — for example, obsolescence allowances on inventories and doubtful debts allowances on receivables — is not offsetting.

This variable shall include, on the one hand, charges for value adjustments in respect of loans and advances and provisions for contingent liabilities and for commitments to be shown under Off-balance sheet items, on the other hand, credits from the recovery of written-off loans and advances and amounts written back following earlier value adjustments and provisions.

These provisions are enteredon the profit and loss account as “Value adjustments in respect of loansand advances”.

Value adjustments to interest amounts on these loans are determined on a case-by-case basis by the Group’s Management and recorded under‘Specific value adjustments’ on loans and advances to customers.

The change in impairment on loans and advances, together with the movements in the specific provision for credit risk, resulted in a loss of EUR - 149 million, compared to a loss of EUR - 2 million in 2008, being a negative variation of EUR - 147 million.

Any increase in the liability relating to financial guarantee is taken to the consolidated income statement in “Change in impairment on loans and advances and provisions for guarantees, net of reversals”.