BMW 2008 Annual Report Download - page 83

84
72 Group Financial Statements
72 Income Statements
74 Balance Sheets
76 Cash Flow Statements
78 Statement of Income and
Expenses recognised
in Equity
79 Notes
79 Accounting Principles
and Policies
88 Notes to the Income
Statement
94
Notes to the Balance Sheet
1 1 5 Other Disclosures
1 2 9 Segment Information
in years
Factory and office buildings, distribution facilities and residential buildings 8 to 50
Plant and machinery 5 to 10
Other equipment, factory and office equipment 3 to 10
Systematic depreciation is based on the following useful lives, applied throughout the BMW Group:
For machinery used in multiple-shift operations, depre-
ciation
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 social costs.
Financing costs are not included in acquisition or manu-
facturing 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 pro-
duced by the Group, as lessor. IAS  (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 IAS , 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 recognised as financial liabilities.
Where Group products are recognised by BMW Group
leasing companies as leased assets under operating leases,
they are measured at manufacturing 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. Residual value pro-
visions are treated as write-downs and offset against
leased products on the assets side of the balance sheet.
The recoverability of the carrying amount of intangible as-
sets (including capitalised development costs and good-
will) and property, plant and equipment is tested regularly
for impairment in accordance with IAS  (Impairment of
Assets) on the basis of cash generating units. This relates
primarily to capitalised development costs and property,
plant and equipment connected with vehicle projects.
If there is no indication of impairment during the year, an
annual impairment test is carried out at the year-end. An
impairment loss is recognised 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. The value in use is determined on the basis of a
present value computation. If the reason for the previously
recognised impairment loss no longer exists, the
impair-
ment loss is reversed up to the level of its rolled-forward
depreciated or amortised cost.
Investments accounted for using the equity method are
measured at the Group’s share of equity taking account
of fair value adjustments on acquisition unless the invest-
ment is impaired.
Investments in non-consolidated subsidiaries reported in
other investments are measured at cost or, if lower, at their
fair value.
Participations are measured at their quoted market price
or fair value. When, in individual cases, these values are not
available or cannot be determined reliably, participations
are measured at cost.
Non-current marketable securities are measured according
to the category of financial asset to which they are classi-
fied. 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 transaction costs.