BMW 2004 Annual Report Download - page 107
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106
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
Provisions
Pension provisions must be recognised in accor-
dance with HGB and IFRSs, 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 income or expense over the expected average
remaining working lives of the workforce.
Other provisions may only be recognised under
IFRSs if an enterprise has a present obligation
(legal or constructive) to a third party and if it is
probable (“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 IFRS purposes 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 un-
der IFRSs using the control concept, which is based
on the underlying substance of the relationship.
Under this concept, control can arise even if the for-
mal criteria for control do not exist. For this reason,
special purpose entities must also be included in
the reporting entity if there is a constructive 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, 18 February 2005
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management