BMW 2004 Annual Report Download - page 105

The consolidated financial statements of BMW AG
have been drawn up in accordance with the standards
valid at the balance sheet date issued by the IASB.
In accordance with §292a HGB, these consolidated
financial statements exempt BMW AG from drawing
up consolidated financial statements in accordance
with German commercial law (HGB).The BMW Group
financial statements and Group management report
also comply with the European Union Directive
on Group Accounting (83/349/EEC), whereby this
directive has been interpreted along the lines of the
interpretation contained in Standard no. 1 (GAS1)
“Exempting Consolidated Financial Statements in
accordance with §292a HGB” issued by the Ger-
man Accounting Standards Committee (GASC).
The accounting policies and consolidation
methods applied in accordance with IFRSs for the
Group financial statements of BMW AG differ from
German accounting rules in the following main areas:
Non-current assets
Under IFRSs, under certain circumstances, internally
generated intangible assets must be recognised
as an asset. In the case of the BMW Group, this is
mainly relevant for development costs incurred
for vehicle and engine projects. Under German ac-
counting rules, it is prohibited to recognise internally
generated intangible items as an asset.
Furthermore, non-current assets are generally
depreciated for IFRS purposes over their useful
economic lives using the straight-line method and
not using the reducing balance method.
Lease transactions
IAS 17 prescribes the accounting rules for lease
transactions. Under these rules, an enterprise which
bears the risks and enjoys the rewards of using a
leased item, is required, as the economic owner, to
recognise that item in its balance sheet. Many leases
have therefore been reclassified from operating
leases to finance leases in accordance with IAS 17.
The accounting treatment of leases is not specifi-
cally dealt with by German accounting rules. In the
absence of such accounting rules, it is therefore
common to apply the treatment prescribed by the
German tax authorities.
Inventories
Under IFRSs, inventory must be measured on a con-
sistent basis at fully absorbed production cost. In
compliance with German accounting law, inventories
of the Group’s production companies were meas-
ured for HGB purposes at the lower direct production
cost. Inventories held by all other group companies
were measured at production cost including a pro-
portion of direct overheads. In addition, in line with
the prudence principle, it is permitted under HGB to
recognise a higher level of write-downs than under
IFRSs. Advance payments received cannot be offset
against inventories under IFRSs.
[43]Disclosures
pursuant to §292a HGB
104
Group Financial Statements 50
Income Statements 51
Balance Sheets 52
Cash Flow Statements 54
Group Statement of
Changes in Equity 56
Notes 57
--Accounting Principles
and Policies 57
--Notes to the Income Statement 66
--Notes to the balance sheet 74
--Other Disclosures 93
--Segment Information 100
--Disclosures pursuant to
§292a HGB 104
Auditors’ Report 107
BMW Group
Notes to the Group Financial Statements
Disclosures pursuant to § 292a HGB