BMW 2001 Annual Report Download - page 56

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For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation.
The cost of internally constructed plant and
equipment comprises all costs which are directly
attributable to the manufacturing process and an
appropriate portion of production-related overheads.
This includes production-related depreciation and
an appropriate proportion of administrative and so-
cial costs.
Financing costs are not included in acquisition
or manufacturing costs.
Non-current assets also include assets relating
to leasing. The BMW Group uses property, plant
and equipment as the lessee and also leases assets,
mainly vehicles manufactured by the Group, as les-
sor. IAS contain rules for determining, on the basis of
the risks and rewards of the parties to the lease, the
economic owner of the assets. In the case of finance
leases the assets are attributed to the lessee and in
the case of operating leases the assets are attrib-
uted to the lessor.
In accordance with IAS 17 (Leases), assets
leased under finance leases are measured at their
fair value or at the present value of the lease pay-
ments if lower. The assets are depreciated using the
straight-line method over their estimated useful lives
or over the lease period, if shorter. The obligations
for future lease instalments are recognised as liabili-
ties within debt.
Where Group products are recognised by BMW
Group leasing companies as leased products un-
der operating leases, they are measured at manu-
facturing costs. All other leased products are meas-
ured at acquisition cost. All leased products are
depreciated using the straight-line method over the
period of the lease to the lower of their notional
residual value or estimated fair value.
The recoverability of the carrying amount of
intangible assets (including capitalised develop-
ment costs and goodwill) and property, plant and
equipment are tested regularly for impairment in
accordance with IAS 36 (Impairment of Assets) on
the basis of cash generating units. An impairment
loss is recognised when the recoverable amount of
an asset, defined as the higher of an assets net sell-
ing price and value in use, is lower than the carrying
amount. If the reason for the previously recognised
impairment loss no longer exists, the impairment
loss is reversed to the level of its rolled-forward de-
preciated or amortised cost.
Investments in non-consolidated subsidiaries
and in other companies which are disclosed within
non-current financial assets are stated at cost,
unless a different fair value for the investment is
available.
Associated companies are generally consoli-
dated using the equity method, whereby the invest-
ment is measured at the Groups share of the equity
of the company.
In the case of non-current marketable securities
and loans, it is necessary under IAS 39 to differenti-
ate between securities which are held for trading,
securities which are available for sale and securities
which are held to maturity. The BMW Group has no
securities which are held for trading. Securities
which are available for sale are measured at their
market price and unrealised gains and losses are
recognised directly in equity (net of deferred taxes).
If a market price is not available, the fair value of the
securities which are available for sale is measured
applying normal measurement methods on the