BMW 2005 Annual Report Download - page 77

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Investments accounted for using the equity
method are measured at the group’s share of equity
taking account of fair value adjustments on acquisi-
tion.
Investments in non-consolidated group com-
panies reported in other investments are measured
at cost, since published price quotations in an active
market are not available and their fair value cannot
be determined reliably.
Investments in other companies are measured
at their quoted market price or fair value. When, in
individual cases, these values are not available or
cannot be determined reliably, investments in other
companies are measured at cost.
Non-current marketable securities are measured
according to the category of financial asset to which
they are classified. No held-for-trading financial
assets are included under this heading.
Financial assets are accounted for on the basis
of the settlement date. On initial recognition, they
are measured at acquisition cost, including trans-
action costs.
Subsequent to initial recognition, available-
for-sale and held-for-trading financial assets are
measured at fair value. When market prices are not
available, the fair value of available-for-sale financial
assets is measured using appropriate valuation
techniques e.g. discounted cash flow analysis based
on market information available at the balance
sheet date.
Loans and receivables which are not held by the
Group for trading purposes, held-to-maturity finan-
cial investments and all financial assets for which
published price quotations in an active market are
not available and whose fair value cannot be deter-
mined reliably, are measured, to the extent that they
have a fixed term, at amortised cost, using the effec-
tive interest method. When the financial assets do
not have a fixed term, they are measured at acquisi-
tion cost.
In accordance with IAS 39 (Financial Instruments:
Recognition and Measurement), assessments are
made regularly as to whether there is any objective
evidence that a financial asset or group of assets
may be impaired. After an impairment test is carried
out, any resulting impairment losses are recognised
in profit or loss. Gains and losses on available-for-
sale financial assets are recognised directly in equity
until the financial asset is disposed of or is deter-
mined to be impaired, at which time the cumulative
loss previously recognised in equity is included in
net profit or loss for the period.
With the exception of derivative financial instru-
ments, all receivables and other current assets
relate to loans and receivables which are not held
for trading. They are measured at amortised cost.
Receivables with maturities of over one year which
bear no or a lower than market interest rate are dis-
counted. Appropriate allowances are recognised
to take account of all identifiable risks.
Receivables from sales financing comprise
receivables from retail customer, dealer and lease
financing.
Items are presented as financial assets to the
extent that they relate to financing transactions.
Derivative financial instruments are only used
within the BMW Group for hedging purposes in or-
der to reduce the currency, interest rate and market
price risks from operating activities and related
financing requirements. All derivative financial instru-
ments (such as interest, currency and combined in-
terest/currency swaps as well as forward currency
contracts) are measured in accordance with IAS 39
at their fair value, irrespective of their purpose or the
intention for which they are held.The fair values of
derivative financial instruments are measured using
Group Financial Statements 62
Income Statements 63
Balance Sheets 64
Cash Flow Statements 66
Group Statement of
Changes in Equity 68
Statement of Income and Expenses
recognised directly in Equity 69
Notes 70
--Accounting Principles
and Policies 70
--Notes to the Income Statement 81
--Notes to the balance sheet 90
--Other Disclosures 114
--Segment Information 121
Auditors’ Report 125