BMW 2011 Annual Report Download - page 88

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76 GROUP FINANCIAL STATEMENTS
76 Income Statements
76 Statement of
Comprehensive Income
78 Balance Sheets
80 Cash Flow Statements
82 Group Statement of Changes
in Equity
84 Notes
84 Accounting Principles
and Policies
100 Notes to the Income
Statement
107 Notes to the Statement
of Comprehensive Income
108
Notes to the Balance Sheet
129 Other Disclosures
145 Segment Information
Accounting principles
The financial statements of BMW AG and of its subsidi-
aries
in Germany and elsewhere have been prepared for
consolidation purposes using uniform accounting policies
in accordance with IAS 27 (Consolidated and Separate
Financial Statements).
Revenues from the sale of products are recognised when
the risks and rewards of ownership of the goods are
transferred to the customer, provided that the amount
of revenue can be measured reliably, it is probable that
the economic benefits associated with the transaction
will flow to the entity and costs incurred or to be in-
curred in respect of the sale can be measured reliably.
Revenues are stated net of settlement discount, bonuses
Foreign currency translation
The financial statements of consolidated companies
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 lia-
bilities
are translated at the closing rate. Exchange differ-
ences arising from the translation of shareholders’ equity
and rebates. Revenues also include lease rentals and
interest income earned in conjunction with financial
services. Revenues from leasing instalments relate to
operating leases and are recognised in the income state-
ment on a straight line basis over the relevant term of
the lease. Interest income from finance leases and from
customer and dealer financing are recognised using
the effective interest method and reported as revenues
within the line item “Interest income on loan financing”.
If the sale of products includes a determinable amount
for subsequent services (multiple-component contracts),
the related revenues are deferred and recognised as
income over the period of the contract. Amounts are
normally recognised as income by reference to the
pattern
of related expenditure.
are offset directly against accumulated other equity.
Exchange 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 subsidiaries are re-
corded, at the date of the transaction, at cost. Exchange
gains and losses computed at the balance sheet date
are recognised as income or expense.
The exchange rates of those currencies which have a ma-
terial impact on the Group Financial Statements were
as follows:
6
5
Closing rate Average rate
31.12. 2011 31.12. 2010 2011 2010
US Dollar 1.30 1.34 1.39 1.33
British Pound 0.84 0.86 0.87 0.86
Chinese Renminbi 8.17 8.80 9.00 8.97
Japanese Yen 100.15 108.61 111.00 116.29
Receivables, payables, provisions, income and expenses
and profits between consolidated companies (intra-group
profits) are eliminated on consolidation.
Under the equity method, investments are measured at
the BMW Group’s share of equity taking account of fair
value adjustments on acquisition. Any difference be-
tween the cost of investment and the Group’s share of
equity is accounted for in accordance with the acqui-
sition
method. Investments in other companies are ac-
counted for as a general rule using the equity method
when significant influence can be exercised (IAS 28
Investments in Associates). There is a rebuttable as-
sumption that the Group has significant influence if
it holds between 20 % and 50 % of the associated com-
pany’s voting power.