34 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, 2020	Dec. 31, 2019

Financial assets at fair value through profit or loss	21,898	16,331
Financial assets at fair value through other comprehensive income (debt instruments)	3,545	3,139
Financial assets at fair value through other comprehensive income (equity instruments)	152	68
of which classified as held for sale	–	3
Financial assets measured at amortized cost	151,497	149,203
of which classified as held for sale	–	158
Financial liabilities at fair value through profit or loss	2,403	1,760
Financial liabilities measured at amortized cost	230,904	229,229
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, 2019
	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, 2019
€ million	Carrying amount	Carrying amount	Fair value	Carrying amount	Carrying amount

Noncurrent assets
Equity-accounted investments	–	–	–	–	8,169	8,169
Other equity investments	54	–	–	–	1,848	1,902
Financial services receivables	288	51,404	52,581	–	35,281	86,973
Other financial assets	1,012	3,625	3,628	916	–	5,553
Tax receivables	–	–	–	–	341	341

Current assets
Trade receivables	1	17,940	17,940	–	–	17,941
Financial services receivables	22	39,936	39,936	–	18,656	58,615
Other financial assets	1,477	10,120	10,120	619	–	12,216
Tax receivables	–	9	9	–	1,181	1,190
Marketable securities	16,681	88	88	–	–	16,769
Cash, cash equivalents and time deposits	–	25,923	25,923	–	–	25,923
Assets held for sale	3	158	158	–	634	795

Noncurrent liabilities
Noncurrent financial liabilities	–	108,348	110,679	–	5,208	113,556
Other noncurrent financial liabilities	943	2,549	2,554	1,007	–	4,499

Current liabilities
Current financial liabilities	–	86,911	86,911	–	1,002	87,912
Trade payables	–	22,745	22,745	–	–	22,745
Other current financial liabilities	817	8,614	8,614	1,427	–	10,858
Tax payables	–	19	19	–	389	408
Liabilities associated with assets held for sale	–	44	44	–	326	370

FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE BY LEVEL
€ million	Dec. 31, 2019	Level 1	Level 2	Level 3

Noncurrent assets
Other equity investments	54	43	0	11
Financial services receivables	288	–	–	288
Other financial assets	1,012	–	595	417
Current assets
Trade receivables	1	–	–	1
Financial services receivables	22	–	–	22
Other financial assets	1,477	–	1,304	173
Marketable securities	16,681	16,681	–	–
Assets held for sale	3	–	–	3
Noncurrent liabilities
Other noncurrent financial liabilities	943	–	425	518
Current liabilities
Other current financial liabilities	817	–	570	247

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	Financial assets held for sale

Balance at Jan. 1, 2019	990	816	–
Foreign exchange differences	22	9	–
Changes in consolidated Group	0	–	–
Total comprehensive income	154	293	–
recognized in profit or loss	157	293	–
recognized in other comprehensive income	−3	–	–
Additions (purchases)	13	–	3
Sales and settlements	−215	−301	–
Transfers into Level 2	−46	−51	–
Classified as held for sale	−3	–	–
Balance at Dec. 31, 2019	913	765	3

Total gains or losses recognized in profit or loss	157	−293	–
Net other operating expense/income	161	−292	–
of which attributable to assets/liabilities held at the reporting date	115	−238	–
Financial result	−4	−1	–
of which attributable to assets/liabilities held at the reporting date	−4	–	–

				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, 2019

Derivatives	3,396	−146	3,250	−2,010	−45	1,195
Financial services receivables	146,218	−630	145,588	–	−98	145,490
Trade receivables	17,952	−11	17,941	0	–	17,941
Marketable securities	16,769	–	16,769	–	–	16,769
Cash, cash equivalents and time deposits	25,923	–	25,923	–	–	25,923
Other financial assets	14,436	146	14,581	0	–	14,581

NET GAINS OR LOSSES FROM FINANCIAL INSTRUMENTS BY IFRS 9 MEASUREMENT CATEGORY
€ million	2020	2019

Financial instruments at fair value through profit or loss	2,309	−242
Financial assets measured at amortized cost	2,899	6,282
Financial assets at fair value through other comprehensive income (debt instruments)	4	7
Financial liabilities measured at amortized cost	−3,242	−4,420
	1,970	1,628

TOTAL INTEREST INCOME AND EXPENSES ATTRIBUTABLE TO FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS
€ million	2020	2019

Financial assets and liabilities measured at amortized cost
Interest income	6,982	7,563
Interest expenses	3,707	4,120
Financial assets (debt instruments) and liabilities measured at fair value through other comprehensive income
Interest income	4	8
Interest expenses	–	–

GAINS AND LOSSES ON THE DISPOSAL OF FINANCIAL ASSETS MEASURED AT AMORTIZED COST
€ million	2020	2019

Gains arising from the derecognition of financial assets measured at amortized cost	810	845
Losses arising from the derecognition of financial assets measured at amortized cost	−1,527	−978
	−717	−133

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34 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)