BMW 2003 Annual Report Download - page 117
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116
001 BMW Group in figures
004 Report of the Supervisory Board
008 Supervisory Board
011 Board of Management
012 Group Management Report
12 A Review of the Financial Year
29 Outlook
30 Financial Analysis
44 Risk Management
047 BMW Stock
050 Corporate Governance
054 Group Financial Statements
118 BMW AG Principal Subsidiaries
120 BMW Group10-year Comparison
122 BMW Group Locations
124 Glossary, Index
Provisions
Pension provisions must be recognised in
accor-
dance with
HGB
and
IFRS
s, and measured at the level
of the expected future payments, on a discounted
basis. Under IFRSs, the projected unit credit method
must be applied, which also takes account of future
salary and pension increases. Under German ac-
counting rules, a number of actuarial methods can
be applied. IFRSs permit an accounting option for
the realisation of gains and losses resulting from
actuarial computations. Unlike HGB, actuarial gains
and losses, which exceed the greater of 10% of the
present value of the obligations or 10% of the fair
value of the plan assets may be recognised as in-
come or expense over the expected average remain-
ing working lives of the workforce.
Other provisions may only be recognised un-
der IFRSs if an enterprise has a present obligation
(legal or constructive) to a third party and if it is prob-
able (“more likely than not”) that the obligation will
be incurred. The recognition of deferred expense
provisions, as permitted by German accounting
rules, is not allowed under IFRSs. Provisions are
measured for HGB purposes on the basis of
prudent management judgement; for IFRSs they
must be measured at their most probable amount.
IFRSs require that long-term provisions are dis-
counted.
Consolidated companies
The group reporting entity must be determined
under IFRSs using the control concept, which is
based on the underlying substance of the relation-
ship. Under this concept, control can arise even if
the formal criteria for control do not exist. For this
reason, so-called special purpose entities must also
be included in the reporting entity if there is a con-
structive ability to control another enterprise. Under
German accounting rules, the group reporting entity
is determined on the basis of the concept of uniform
management and the control concept. This control
concept lays more emphasis on the legal situation.
Munich, 20 February 2004
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management