BMW 2001 Annual Report Download - page 57

001 BMW Group in figures
004 Report of the Supervisory Board
008 Supervisory Board
011 Board of Management
012 Group Management Report
029 BMW Stock
033 Group Financial Statements
098 BMW AG Financial Statements
104 BMW Group Annual Comparison
106 BMW Group Locations
108 Glossary
112 Index
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basis of market information available at the reporting
date. Financial assets which are held to maturity are
measured at cost or their impaired value if applica-
ble.
Inventories of raw materials, supplies and
goods for resale are shown as a general rule at the
lower of average acquisition cost and net realisable
value. In certain specific cases, the FIFO method
(first-in first-out) is applied.
Work in progress and finished goods are stated
at manufacturing cost, comprising all costs which
are directly attributable to the manufacturing
process and an appropriate share of production-re-
lated overheads. These include production-related
depreciation and an appropriate proportion of ad-
ministrative and social costs.
Financing costs are not included in acquisition
or manufacturing costs.
Write-downs are made to cover risks arising
from slow-moving items or reduced saleability.
Lower values are applied at the balance sheet date
where selling prices have been reduced.
Receivables and other current assets are
stated at their nominal value or at cost, less appro-
priate allowances for identifiable risks. Receivables
with maturities of over one year which bear no or
lower than market interest rate are discounted. An
allowance based on past experience is recognised
to take account of general credit risk.
Receivables from sales financing comprise re-
ceivables from customer, dealer and lease financing.
Derivative financial instruments are only
used within the BMW Group for hedging purposes
in order to reduce the currency, interest rate and
market price risks from operating activities and the
related financing requirements. All derivative finan-
cial instruments (such as interest, currency and
combined interest/currency swaps as well as forward
currency contracts) are measured in accordance
with IAS 39 at fair value, irrespective of the purpose
of or the reason for entering into such instruments.
In those cases where hedge accounting is applied,
changes in fair value are recognised either in income
or directly in equity under accumulated other equity,
depending on whether the transactions are classi-
fied as fair value hedges or cash flow hedges. In the
case of fair value hedges, the results of the fair value
measurement of the derivative financial instruments
and of the related hedged items are recognised in
the income statement. In the case of fair value
changes from cash flow hedges which are used to
mitigate the future cash flow risk on a recognised
asset or liability or on forecasted transactions, the
portion of the unrealised gains and losses on the
hedging instrument that is determined to be an ef-
fective hedge is recognised initially directly in accu-
mulated other equity. The recognition occurs in the
income statement when the hedged item itself is
recognised in the income statement. The ineffective
portion of the change in the fair value measurement
is recognised immediately in the income statement.
If, contrary to the normal case within the BMW
Group, hedge accounting cannot be applied, the
gains or losses from the fair value measurement
of derivative financial instruments are recognised
immediately in the income statement.
Current marketable securities comprise
securities available for sale, which are measured at
their market value. If a market price is not available,
the fair value is measured by applying normal meas-
urement methods on the basis of market informa-
tion available at the reporting date. Unrealised gains
and losses are recognised directly in accumulated
other equity (net of deferred taxes) until they are
realised.
In accordance with IAS 12, deferred tax as-
sets and liabilities are recognised on all temporary
differences between the tax and IAS bases of assets
and liabilities and on consolidations affecting net
profit. Deferred tax assets also include claims to
future tax reductions which arise from the expected
usage of existing tax loss carry forwards, where this
usage is probable. Deferred taxes are computed us-
ing enacted or planned tax rates which are expected