BMW 2003 Annual Report Download - page 65

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
64
The financial statements of consolidated companies
which are drawn up in a foreign currency are trans-
lated using the functional currency concept (IAS 21:
The Effects of Changes in Foreign Exchange Rates)
and the foreign entity method. Since foreign sub-
sidiaries operate their businesses autonomously,
from a financial, economical and organisational point
of view, the functional currency of these companies
is identical to the local currency. Income and ex-
penses of foreign subsidiaries are therefore trans-
lated in the Group financial statements at the average
exchange rate for the year, and assets and liabilities
are translated at the closing rate. Exchange differ-
The financial statements of BMW AG and of its
subsidiaries in Germany and elsewhere have been
prepared for consolidation purposes using uniform
accounting policies in accordance with IAS 27.
Revenues from the sale of products are recog-
nised 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 pay-
ment can be assumed. Revenues are stated net of
discounts, allowances, settlement discount and
rebates. In the case of long-term construction work,
revenues are, in accordance with IAS 18 (Revenue)
and IAS 11 (Construction Contracts), not recognised
ences arising from the translation of shareholders’
equity are offset directly against accumulated other
equity. Exchange 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 individual 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 against the euro as follows:
by reference to the stage of completion (percentage
of completion method), since the effect on revenue
recognition is at present not material for the BMW
Group. Revenues also include lease rentals and in-
terest income from financial services. Revenues for
the financial operations sub-group also include
the interest income earned by group financing com-
panies.
Profits arising on the sale of vehicles for which
agroup company retains a repurchase commitment
(buy-back contracts) are not recognised until such
profits have been realised. The vehicles are included
in inventories and stated at cost.
[6]Accounting
principles
[5]Foreign currency
translation
Closing rate Average rate
31.12. 2003 31. 12. 2002 2003 2002
US Dollar 1.25 1.04 1.13 0.95
British Pound 0.70 0.65 0.69 0.63
South African Rand 8.27 9.02 8.53 9.90
Japanese Yen 133.82 123.96 131.04 118.08
Australian Dollar 1.67 1.86 1.74 1.74