BMW 2007 Annual Report Download - page 85

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In addition, after obtaining approval from the
relevant local authorities, BMW Holding B. V., The
Hague, acquired SimeLease (Malaysia) Sdn Bhd,
Kuala Lumpur, and that entity’s subsidiary, SimeCredit
(Malaysia) Sdn Bhd, Kuala Lumpur, on 13 April 2007.
The names of these entities have been changed to
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur, and
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur.
With effect from 1 October 2007, all of the shares
of Boxer S. r. l., Cassinetta di Biandronno, were ac-
quired by BMW Italia S. p. A., Milan, and BMW España
Finance S. L., Madrid. The acquired company was
renamed Husqvarna Motorcycles S. r. l., Cassinetta
di Biandronno.
Consolidation principles
The equity of subsidiaries is consolidated in accord-
ance with IFRS 3 (Business Combinations). IFRS 3
requires that all business combinations are accounted
for using the purchase method, whereby identifiable
assets and liabilities acquired are measured initially
at their fair value. The excess of the Group’s interest
in the net fair value of the identifiable assets and lia-
bilities acquired over cost is recognised as goodwill
and is subjected to a regular review for possible im-
pairment. Goodwill of euro 91 million which arose
prior to 1 January 1995 remains netted against re-
serves. In the event of impairment and deconsolida-
tion, goodwill that has been deducted from equity
is dealt with directly in equity. The companies BMW
Financial Services Danmark A/S, Kolding, BMW
Renting (Portugal) Lda., Lisbon, BMW Acquisitions
Ltda., São Paulo, BMW Financeira S. A. Credito,
Financiamento e Investimento, São Paulo, BMW
Leasing do Brasil, S. A., São Paulo, BMW Asia Pte.
Ltd., Singapore, BMW Melbourne Pty. Ltd., Mel-
bourne, BMW Sydney Pty. Ltd., Sydney, and BMW
In addition, 51 % of the shares of CEC Finance
Ltd., Hong Kong, and 100 % of the shares of BMW
Osaka Corp., Osaka, Husqvarna Motorcycles NA,
LLC, Wilmington, Del., and John Cooper Garages
Ltd., Bracknell, were acquired during the year.
CEC Finance Ltd., Hong Kong, was renamed BMW
Financial Services Hong Kong Limited, Hong Kong.
The entities listed above are not material in terms
of the Group’s earnings performance, financial posi-
tion and net assets.
The investment in TRITEC Motors Ltda., Campo
Largo, was sold to the Chrysler Group on 11 July
2007 in line with agreements in place between the
various parties.
Foreign currency translation
The financial statements of consolidated compa-
nies which are drawn up in a foreign currency are
translated using the functional currency concept
(IAS 21: The Effects of Changes in Foreign Exchange
Rates) and the modified closing rate method. The
functional currency of a subsidiary is determined as
a general rule on the basis of the primary economic
environment in which it operates and corresponds
therefore to the relevant local currency. Income and
expenses of foreign subsidiaries are translated in the
Group financial statements at the average exchange
rate for the year, and assets and liabilities are trans-
lated at the closing rate. Exchange differences arising
from the translation of shareholders’ equity are off-
set directly against accumulated other equity. Ex-
change differences arising from the use of different
exchange rates to translate the income statement
are also offset directly against accumulated other
equity.
Foreign currency receivables and payables in
the single entity accounts of BMW AG and subsidi-
aries are recorded, at the date of the transaction, at
cost. Exchange gains and losses computed at the
balance sheet date are recognised as income or ex-
pense.
Financial Services New Zealand Ltd., Auckland, were
all consolidated for the first time as of 1 January 2007.
The equivalent date for BMW Fuhrparkmanagement
Beteiligungs GmbH, Stuttgart, and LHS Leasing-
und Handelsgesellschaft Deutschland
mbH, Stutt-
gart, was 30 June 2007, and that for BMW
Vertriebs
GmbH, Salzburg, 31 December 2007.
Receivables, liabilities, provisions, income and ex-
penses and profits between consolidated com panies
(intragroup profits) are eliminated on consolidation.
Under the equity method, investments are
measured at the Group’s share of equity taking ac-
count of fair value adjustments on acquisition, based
on the Group’s shareholding. Any difference be-
tween the cost of investment and the Group’s share
of equity is accounted for in accordance with the
purchase method. Investments in other companies
are accounted for as a general rule using the equity
method when significant influence can be exercised
(IAS 28 Investments in Associates). This is normally
the case when voting rights of between 20 % and
50 % are held (associated companies).
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