BMW 2012 Annual Report Download - page 89

89 GROUP FINANCIAL STATEMENTS
Accounting policies
The financial statements of BMW AG and of its subsid-
iaries
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 dealer or customer, provided that the
amount of revenue can be measured reliably, it is prob-
able that the economic benefits associated with the
transaction will flow to the entity and costs incurred or
to be incurred in respect of the sale can be measured
reliably. Revenues are stated net of settlement discount,
bonuses 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 in-
come statement 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 determi-
nable
amount for subsequent services (multiple-compo-
nent contracts), the related revenues are deferred and
recognised as income over the relevant service period.
Amounts are normally recognised as income by reference
to the pattern of related expenditure.
Profits arising on the sale of vehicles for which a Group
company retains a repurchase commitment (buy-back
contracts) are not recognised until such profits have
been realised. The vehicles are included in inventories
and stated at cost.
Cost of sales comprises the cost of products sold and
the acquisition cost of purchased goods sold. In addi-
tion to directly attributable material and production
costs, it also includes research costs and development
costs not recognised as assets, the amortisation of
capitalised development costs as well as overheads (in-
cluding depreciation of property, plant and equipment
and amortisation of other intangible assets relating to
production) and write-downs on inventories. Cost of
sales also includes freight and insurance costs relating
to deliveries to dealers and agency fees on direct sales.
Expenses which are directly attributable to financial
services business and interest expense from refinancing
the entire financial services business, including the ex-
pense
of risk provisions and write-downs, are reported
in cost of sales.
In accordance with IAS 20 (Accounting for Government
Grants and Disclosure of Government Assistance),
public sector grants are not recognised until there is
reasonable assurance that the conditions attaching
to them have been complied with and the grants will
be received. They are recognised as income over the
periods necessary to match them with the related costs
which they are intended to compensate.
Basic earnings per share are computed in accordance
with IAS 33 (Earnings per Share). Undiluted earnings
per share are calculated for common and preferred
stock by dividing the net profit after minority interests,
as attributable to each category of stock, by the average
Closing rate Average rate
31. 12. 2012 31. 12. 2011 2012 2011
US Dollar 1.32 1.30 1.29 1.39
British Pound 0.81 0.84 0.81 0.87
Chinese Renminbi 8.23 8.17 8.11 9.00
Japanese Yen 114.10 100.15 102.63 111.00
Russian Rouble 40.41 41.69 39.91 40.88
5
ment are recognised in the income statement in accord-
ance with the underlying substance of the relevant
transactions.
The exchange rates of those currencies which have a
material impact on the Group Financial Statements
were as follows: