35 IFRS 7 (Financial Instruments)

The table below shows the carrying amounts of financial instruments by measurement category:

CARRYING AMOUNT OF FINANCIAL INSTRUMENTS BY IFRS 9 MEASUREMENT CATEGORY
€ million	Dec. 31, 2019	Dec. 31, 2018

Financial assets at fair value through profit or loss	16,331	15,556
Financial assets at fair value through other comprehensive income (debt instruments)	3,139	3,542
Financial assets at fair value through other comprehensive income (equity instruments)	68	148
of which classified as held for sale	3	–
Financial assets measured at amortized cost	149,203	143,466
of which classified as held for sale	158	–
Financial liabilities at fair value through profit or loss	1,760	1,484
Financial liabilities measured at amortized cost	229,229	225,989
of which classified as held for sale	44	–

CLASSES OF FINANCIAL INSTRUMENTS

Financial instruments are divided into the following classes at the Volkswagen Group:

financial instruments measured at fair value;
financial instruments measured at amortized cost;
derivative financial instruments within hedge accounting;
not allocated to any measurement category; and
credit commitments and financial guarantees (off-balance sheet).

RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS

The following table shows the reconciliation of the balance sheet items to the relevant classes of financial instruments, broken down by the carrying amount and fair value of the financial instruments.

The fair value of financial instruments measured at amortized cost, such as receivables and liabilities, is calculated by discounting using a market rate of interest for a similar risk and matching maturity. For reasons of materiality, the fair value of current balance sheet items is generally deemed to be their carrying amount.

For reconciliation to the carrying amounts, the “Not allocated to a measurement category” column in the table also includes items other than financial instruments.

The risk variables governing the fair value of the receivables are risk-adjusted interest rates.

“Financial instruments measured at fair value” also include shares in partnerships and corporations.

RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2018
	MEASURED AT FAIR VALUE	MEASURED AT AMORTIZED COST		DERIVATIVE FINANCIAL INSTRUMENTS WITHIN HEDGE ACCOUNTING	NOT ALLOCATED TO A MEASUREMENT CATEGORY	BALANCE SHEET ITEM AT DEC. 31, 2018
€ million	Carrying amount	Carrying amount	Fair value	Carrying amount	Carrying amount

Noncurrent assets
Equity-accounted investments	–	–	–	–	8,434	8,434
Other equity investments	134	–	–	–	1,340	1,474
Financial services receivables	286	46,905	47,789	–	31,501	78,692
Other financial assets	772	4,240	4,252	1,510	–	6,521
Tax receivables	–	–	–	–	476	476

Current assets
Trade receivables	–	17,537	17,537	–	352	17,888
Financial services receivables	22	36,529	36,529	–	17,665	54,216
Other financial assets	1,094	9,150	9,150	1,341	1	11,586
Tax receivables	–	29	29	–	1,850	1,879
Marketable securities	16,940	140	140	–	–	17,080
Cash, cash equivalents and time deposits	–	28,938	28,938	–	–	28,938

Noncurrent liabilities
Noncurrent financial liabilities	–	100,727	100,964	–	399	101,126
Other noncurrent financial liabilities	767	2,085	2,087	368	–	3,219

Current liabilities
Put options and compensation rights granted to noncontrolling interest shareholders	–	1,853	1,853	–	–	1,853
Current financial liabilities	–	89,707	89,707	–	51	89,757
Trade payables	–	23,607	23,607	–	–	23,607
Other current financial liabilities	718	7,977	7,977	721	–	9,416
Tax payables	–	33	33	–	423	456

FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE BY LEVEL
€ million	Dec. 31, 2018	Level 1	Level 2	Level 3

Noncurrent assets
Other equity investments	134	56	25	53
Financial services receivables	286	–	–	286
Other financial assets	772	–	357	415
Current assets
Financial services receivables	22	–	–	22
Other financial assets	1,094	–	880	214
Marketable securities	16,940	16,940	–	–
Noncurrent liabilities
Other noncurrent financial liabilities	767	–	250	516
Current liabilities
Other current financial liabilities	718	–	419	299

CHANGES IN BALANCE SHEET ITEMS MEASURED AT FAIR VALUE BASED ON LEVEL 3
€ million	Financial assets measured at fair value	Financial liabilities measured at fair value

Balance at Jan. 1, 2018	823	765
Foreign exchange differences	−33	−3
Changes in consolidated Group	−184	–
Total comprehensive income	78	204
recognized in profit or loss	27	204
recognized in other comprehensive income	51	–
Additions (purchases)	339	28
Sales and settlements	−2	−183
Transfers into Level 2	−32	5
Balance at Dec. 31, 2018	990	816

Total gains or losses recognized in profit or loss	27	−204
Net other operating expense/income	31	−203
of which attributable to assets/liabilities held at the reporting date	58	−235
Financial result	−4	0
of which attributable to assets/liabilities held at the reporting date	−5	–

				AMOUNTS THAT ARE NOT SET OFF IN THE BALANCE SHEET
€ million	Gross amounts of recognized financial assets	Gross amounts of recognized financial liabilities set off in the balance sheet	Net amounts of financial assets presented in the balance sheet	Financial instruments	Collateral received	Net amount at Dec. 31, 2018

Derivatives	3,979	0	3,979	−1,819	−171	1,989
Financial services receivables	132,909	–	132,909	–	−77	132,831
Trade receivables	17,537	0	17,537	0	–	17,536
Marketable securities	17,080	–	17,080	–	–	17,080
Cash, cash equivalents and time deposits	28,938	–	28,938	–	–	28,938
Other financial assets	14,307	−15	14,291	–	–	14,291

NET GAINS OR LOSSES FROM FINANCIAL INSTRUMENTS BY IFRS 9 MEASUREMENT CATEGORY
€ million	2019	2018

Financial instruments at fair value through profit or loss	−242	−763
Financial assets measured at amortized cost	6,282	6,241
Financial assets at fair value through other comprehensive income (debt instruments)	7	17
Financial liabilities measured at amortized cost	−4,420	−4,963
	1,628	531

TOTAL INTEREST INCOME AND EXPENSES ATTRIBUTABLE TO FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS
€ million	2019	2018

Financial assets and liabilities measured at amortized cost
Interest income	7,563	5,022
Interest expenses	4,120	3,183
Financial assets (debt instruments) and liabilities measured at fair value through other comprehensive income
Interest income	8	17
Interest expenses	–	1

GAINS AND LOSSES ON THE DISPOSAL OF FINANCIAL ASSETS MEASURED AT AMORTIZED COST
€ million	2019	2018

Gains arising from the derecognition of financial assets measured at amortized cost	845	1,001
Losses arising from the derecognition of financial assets measured at amortized cost	−978	−1,073
	−133	−72

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35 IFRS 7 (Financial Instruments)

CLASSES OF FINANCIAL INSTRUMENTS

RECONCILIATION OF BALANCE SHEET ITEMS TO CLASSES OF FINANCIAL INSTRUMENTS

OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

ASSET-BACKED SECURITIES TRANSACTIONS

ADDITIONAL INCOME STATEMENT DISCLOSURES IN ACCORDANCE WITH IFRS 7 (FINANCIAL INSTRUMENTS)