BMW 2011 Annual Report Download - page 90

90
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
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 proportion
of production-related overheads. This includes produc-
tion-related depreciation and an appropriate proportion
of administrative and social costs.
As a general rule, borrowing costs are not included in
acquisition or manufacturing cost. Borrowing costs that
are directly attributable to the acquisition, construction
or production of a qualifying asset are recognised as a
part of the cost of that asset in accordance with IAS 23
(Borrowing Costs).
Non-current assets also include assets relating to leases.
The BMW Group uses property, plant and equipment
as lessee on the one hand and leases out vehicles pro-
duced by the Group and other brands as lessor on the
other. 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 IAS 17, 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
entities as leased products under operating leases, they
are measured at manufacturing cost. All other leased
products are measured at acquisition cost. All leased
products are depreciated over the period of the lease us-
ing the straight-line method down to their expected
residual value. If the recoverable amount is lower than
the expected residual value, an impairment loss is rec-
ognised for the shortfall. A test is carried out at each
balance sheet date to determine whether an impairment
loss
recognised for an asset in prior years no longer exists
or has decreased. In these cases, the carrying amount of
the asset is increased to the recoverable amount. The
higher carrying amount resulting from the reversal may
not, however, exceed the rolled-forward amortised cost
of the asset.
If there is any evidence of impairment of non-financial
assets (except inventories and deferred taxes), or if an
annual impairment test is required to be carried out –
i.e. for intangible assets not yet available for use, intan-
gible assets with an indefinite useful life and goodwill
acquired as part of a business combination – an impair-
ment test pursuant to IAS 36 (Impairment of Assets) is
performed. Each individual asset is tested separately
unless the asset generates cash flows that are largely in-
dependent of the cash flows from other assets or groups
of assets (cash-generating units / CGUs). For the
purposes
of the impairment test, the asset’s carrying amount is com-
pared
with its recoverable amount, the latter defined
as the higher of the asset’s fair value less costs to sell and
its value in use. An impairment loss is recognised when
the recoverable amount is lower than the asset’s carrying
amount. Fair value less costs to sell corresponds to the
amount obtainable from the sale of an asset or groups of
in years
Factory and office buildings, distribution facilities and residential buildings 8 to 50
Plant and machinery 4 to 21
Other equipment, factory and office equipment 3 to 10
Goodwill arises on first-time consolidation of an ac-
quired business when the cost of acquisition exceeds
the Group’s share of the fair value of the individually
identifiable assets acquired and liabilities and con-
tingent liabilities assumed.
All items of property, plant and equipment are con-
sidered to have finite useful lives. They are recognised
at acquisition or manufacturing cost less scheduled de-
preciation based on the estimated useful lives of the
assets. Depreciation on property, plant and equipment
reflects the pattern of their usage and is generally com-
puted using the straight-line method. Components of
items of property, plant and equipment with different
useful lives are depreciated separately.
Systematic depreciation is based on the following useful
lives, applied throughout the BMW Group: