BMW 2004 Annual Report Download - page 66

Other provisions are recognised when the
Group has an obligation to a third party, an outflow of
resources is probable and a reliable estimate can be
made of the amount of the obligation. Measurement
is computed on the basis of fully attributable costs.
Non-current provisions with a remaining period of
more than one year are discounted to the present
value of the expenditures expected to settle the obli-
gation at the balance sheet date.
Financial liabilities are measured on first-time
recognition at cost, which is equivalent to the fair
value of the consideration given. Transaction costs
are included in this initial measurement. Subsequent
to initial recognition, liabilities are, with the exception
of derivative financial instruments, measured at
amortised cost. The BMW Group has no liabilities
which are held for trading. Liabilities from finance
leases are stated at the present value of the future
lease payments and disclosed under debt.
The preparation of the Group financial state-
ments in accordance with standards issued by the
IASB requires management to make certain assump-
tions and estimates that affect the reported amounts
of assets and liabilities, revenues and expenses and
contingent liabilities. The assumptions and esti-
mates relate principally to the group-wide determi-
nation of economic useful lives, the recognition and
measurement of provisions and the recoverability
of future tax benefits. Actual amounts could in certain
cases differ from those assumptions and estimates.
Where new information becomes available, dif-
ferences
are reflected in the income statement.
65
[7]New accounting
rules
The IASB has issued ten new or revised Standards or
amendments to existing Standards in 2004, as follows:
–IFRS 2 (Share-based Payment)
–IFRS 3 (Business Combinations)
–IFRS 4 (Insurance Contracts)
–IFRS 5 (Non-current Assets Held for Sale and
Discontinued Operations)
–IFRS 6 (Exploration for and Evaluation of Mineral
Resources)
–IAS 36 (Impairment of Assets)
–IAS 38 (Intangible Assets)
– Amendment to IAS 19 (Employee Benefits:
Actuarial Gains and Losses, Group Plans and
Disclosure)
– Amendment to IAS 39 (Financial Instruments:
Recognition and Measurement on Fair Value
Hedge Accounting for a Portfolio Hedge of
Interest Rate Risk)
– Amendment to IAS 39 (Financial Instruments:
Transition and Initial Recognition of Financial
Assets and Financial Liabilities)
IFRS 3 is required to be applied (in conjunction
with the relevant provisions of IAS 36 and IAS 38) for
all business combinations for which the agreement
date is 31 March 2004 or later.The effect of applying
this Standard in the BMW Group financial state-
ments at 31 December 2004 was not significant.
IFRS 3, IAS 36 und IAS 38 must be applied prospec-
tively by the BMW Group, from 1 January 2005 on-
wards, for goodwill and intangible assets arising from
earlier business combinations and for investments
accounted for using the equity method.
The remaining Standards listed above (except
for IFRS 6 and Amendment to IAS 19) become
mandatory from 1 January 2005 onwards. IFRS 6
and Amendment to IAS 19 do not become manda-
tory until 1 January 2006.
With the exception of IFRS 3, the new, revised
and amended Standards were not applied before
their mandatory date in the Group financial state-
ments
at 31 December 2004.This also applies to the
Improvements to International Accounting Standards