BMW 2005 Annual Report Download - page 76

75
Expenditure on low value non-current assets is
written off in full in the year of acquisition.
Systematic depreciation is based on the follow-
ing useful lives, applied throughout the Group:
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation.
The cost of internally constructed plant and
equipment comprises all costs which are directly
attributable to the manufacturing process and an
appropriate portion of production-related overheads.
This includes production-related depreciation and
an appropriate proportion of administrative and so-
cial costs.
Financing costs are not included in acquisition
or manufacturing cost.
Non-current assets also include assets relating
to leases. The BMW Group uses property, plant
and equipment as lessee and also leases out assets,
mainly vehicles manufactured by the Group, as les-
sor. IAS 17 (Leases) contains rules for determining,
on the basis of risks and rewards, the economic
owner of the assets. In the case of finance leases
the assets are attributed to the lessee and in the
case of operating leases the assets are attributed to
the lessor.
In accordance with IAS17, assets leased under
finance leases are measured at their fair value at the
inception of the lease or at the present value of the
lease payments, if lower. The assets are depreciated
using the straight-line method over their estimated
useful lives or over the lease period, if shorter. The
obligations for future lease instalments are recog-
nised as financial liabilities.
Where Group products are recognised by BMW
Group leasing companies as leased assets under
operating leases, they are measured at manufactur-
ing cost. All other leased products are measured at
acquisition cost. All leased products are depreciated
using the straight-line method over the period of
the lease to the lower of their imputed residual value
or estimated fair value.
The recoverability of the carrying amount of
intangible assets (including capitalised development
costs and goodwill) and property, plant and equip-
ment is tested regularly for impairment in accordance
with IAS 36 (Impairment of Assets) on the basis of
cash generating units. An impairment loss is recog-
nised when the recoverable amount (defined as the
higher of the asset’s net selling price and its value in
use) is lower than the carrying amount. If the reason
for the previously recognised impairment loss no
longer exists, the impairment loss is reversed up to
the level of its rolled-forward depreciated or amor-
tised cost.
in years
Factory and office buildings, distribution facilities and residential buildings 10 to 50
Plant and machinery 5 to 10
Other equipment, factory and office equipment 3 to 10