BMW 2001 Annual Report Download - page 54

53
The financial statements of consolidated companies
prepared in a foreign currency, are translated using
the functional currency concept (IAS 21: The Ef-
fects of Changes in Foreign Exchange Rates) and
the foreign entity method. Since foreign subsidiaries
operate their businesses autonomously, from a fi-
nancial, economic and organisational point of view,
the functional currency of these companies is identi-
cal to the local currency. Income and expenses of
foreign subsidiaries are therefore translated in the
Group financial statements at the average exchange
rate for the year, and assets and liabilities are trans-
lated at the closing rate. Exchange differences aris-
The single entity financial statements of BMW
AG and of its subsidiaries in Germany and elsewhere
have been prepared in accordance with IAS 27 using
uniform accounting policies. Discrepancies in the
accounting policies of associated companies have
not been adjusted where the amounts involved are
negligible.
Revenues from the sale of products are re-
cognised when the risks and rewards of ownership
of the goods are transferred to the customer, the
sales price is agreed or determinable and receipt of
payment can be assumed. Revenues are stated net
of discounts, allowances, settlement discounts and
rebates. In the case of long-term production work
of BMW Fahrzeugtechnik GmbH, Eisenach, and of
ing from the translation of shareholders equity are
offset directly against accumulated other equity. Ex-
change differences arising from the use of different
exchange rates to translate the income statement
are also offset directly against accumulated other
equity.
Foreign currency receivables and payables in
the single entity accounts of BMW AG and sub-
sidiaries are recorded at cost. Exchange gains and
losses computed at the balance sheet date are
recognised as income or expense.
The exchange rates of the major currencies
have moved as follows against the euro:
the Softlab sub-group, revenues are recognised
in accordance with IAS 18 (Revenue) and IAS 11
(Construction Contracts) using the percentage
of completion method. Revenues also include
lease rentals and interest income from financial
services.
Cost of sales comprises the cost of manu-
facturing products which have been sold and the
acquisition cost of purchased merchandise. It in-
cludes directly attributable material and production
costs and all indirect production overheads. These
include depreciation of property, plant and equip-
ment and amortisation of other intangible assets re-
lating to production and write-downs on inventories.
Cost of sales also includes costs which are directly
[6]Accounting policies
[5]Foreign currency
translation
Closing rate Average rate
31.12. 2001 31.12.2000 2001 2000
US Dollar 0.88 0.93 0.90 0.93
Pound Sterling 0.61 0.62 0.62 0.61
South African rand 10.53 7.04 7.70 6.38
Japanese yen 115.48 106.56 108.73 99.59