BMW 2012 Annual Report Download - page 88

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78 GROUP FINANCIAL STATEMENTS
78 Income Statements
78 Statement of
Comprehensive Income
80 Balance Sheets
82 Cash Flow Statements
84 Group Statement of Changes
in Equity
86 Notes
86 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
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 usually to the
relevant local currency. Income and expenses of foreign
subsidiaries are translated in the Group Financial State-
ments at the average exchange rate for the year, and
assets and liabilities are translated at the closing rate.
Exchange differences arising from the translation of
shareholders’ equity are offset directly against accumu-
lated other equity. Exchange differences arising from
the use of different exchange rates to translate the
income statement are also offset directly against accu-
mulated 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. At the end
of the reporting period, foreign currency receivables
and payables are translated at the closing exchange rate.
The resulting unrealised gains and losses as well as the
subsequent realised gains and losses arising on settle-
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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 acquisition method, whereby identifia-
ble assets and liabilities acquired are measured at
their fair value at acquisition date. An excess of acqui-
sition cost over the Group’s share of the net fair value
of identifiable assets, liabilities and contingent lia-
bilities is recognised as goodwill as a separate balance
sheet line item and allocated to the relevant cash-
generating unit (CGU). Goodwill of € 91 million which
arose prior to 1 January 1995 remains netted against
reserves.
Receivables, payables, provisions, income and expenses
Delhi, BMW Osaka Corp., Osaka, BMW Receivables 1
Inc., Whitby, BMW Receivables 2 Inc., Whitby, and
BMW Receivables Limited Partnership, Whitby, were
consolidated for the first time in the financial year 2012.
The following mergers took place during the financial
year 2012: Alphabet B.V., Rijswijk, with Alphabet
Nederland B. V., Breda; Alphabet Belgium Short Term
Rental N. V., Aartselaar, with Alphabet Belgium Long
Term Rental N. V., Aartselaar; ETS Garcia S. A., Paris,
with BMW France S. A., Montigny-le-Bretonneux;
Alphabet Italia S. p. A., Milan with Alphabet Italia Fleet
Management S. p. A., Rome; and Alphabet Fleet Ser-
vices España S. L., Madrid, with Alphabet España Fleet
Management S. A. U., Madrid. As a result of these
and profits between consolidated companies (intragroup
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. Any difference between the
cost of investment and the Group’s share of equity
is accounted for in accordance with the acquisition
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). As a general rule, there is
a rebuttable assumption that the Group has signifi-
cant
influence if it holds between 20 % and 50 % of the
associated company’s voting power.
mergers Alphabet B. V., Rijswijk, Alphabet Belgium
Short Term Rental N. V., Aartselaar, ETS Garcia S. A.,
Paris, Alphabet Italia S. p. A., Milan, and Alphabet Fleet
Services España S. L., Madrid, ceased to be consoli-
dated companies. Furthermore, BMW Overseas Enter-
prises N. V., Willemstad, was wound up and ceased to
be a consolidated company.
The group reporting entity also changed by comparison
to the previous year as a result of the first-time con-
solidation of six special purpose trusts and one special
purpose securities fund and the deconsolidation of
three special purpose trusts and three special purpose
securities funds.
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