BMW 2013 Annual Report Download - page 106

106
88 GROUP FINANCIAL STATEMENTS
88 Income Statements
88 Statement of
Comprehensive Income
90 Balance Sheets
92 Cash Flow Statements
94 Group Statement of Changes in
Equity
96 Notes
96 Accounting Principles and
Policies
114 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122
Notes to the Balance Sheet
145 Other Disclosures
161 Segment Information
The calculation of pension provisions requires assump-
tions to be made with regard to discount factors, salary
trends, employee fluctuation and the life expectancy
of
employees. As in previous years, discount factors are
determined by reference to market yields at the end of
the reporting period on high quality corporate bonds.
The salary level trend refers to the expected rate of
salary increase which is estimated annually depending
on inflation and the career development of employees
within the Group. Further information is provided in
note 35.
Adjustments as a result of IAS 19 (revised 2011)
In June 2011 the IASB published amendments to IAS 19
(
Employee Benefits), in particular in relation to post -
retirement benefits and pensions. The revised Standard
was endorsed by the EU in June 2012. The revised version
of IAS 19 is mandatory for annual periods beginning on
or after 1 January 2013.
As a result of the revised Standard, the BMW Group
has made amendments mainly in connection with the
measurement of obligations for pensions and pre-retire-
ment part-time working arrangements.
The change in the measurement of pension obligations
relates primarily to the treatment of other expected
administrative costs, which may no longer be included
in the measurement of the obligation. In addition, more
extensive disclosure requirements now apply.
The requirement to recognise past service cost imme-
diately
as expense (rather than spread such costs over
the term) also results in an adjustment to pension provi-
sions.
The adjustments to the provision for pre-retirement part-
time working arrangements result from a change in
the measurement of top-up amounts, which are now
required, in accordance with revised IAS 19.8, to be
recognised as other long-term employee benefits. Under
the new rules, the expense for top-up amounts is re-
quired to be recognised in instalments with effect from
7
The calculation of deferred tax assets requires assump-
tions to be made with regard to the level of future taxa-
ble income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast op-
erating results and the impact on earnings of the rever-
sal of taxable temporary differences. Since future
busi-
ness developments cannot be predicted with certainty
and to some extent cannot be influenced by the BMW
Group, the measurement of deferred tax assets is sub-
ject
to uncertainty. Further information is provided in
note 16.
the contract date up to the end of working phase of such
arrangements and then released over the period of the
work-free phase (rather than recognising the full amount
as a provision at the start of the working phase).
The revised version of IAS 19 also changes the presen-
tation of financial result in the income statement. As
a result of the fact that net interest is now required to
be computed on the basis of the net defined benefit
liability for pension plans, the expense arising from
unwinding the interest on pension obligations is now
offset against interest income from plan assets. The
statement of total comprehensive income now includes
the line item “Remeasurement of the net defined bene-
fit
liability for pension plans”. In previous financial
statements (up to the Group Financial Statements for
the year ended 31 December 2012), the corresponding
amounts were designated as actuarial gains and losses
on defined benefit pension benefits, similar obligations
and plan assets.
The removal of the corridor method and other amend-
ments to IAS 19 do not have any impact on the BMW
Group.
The new rules are required to be applied retrospectively.
For this reason, the opening balance sheet at 1 January
2012, the comparative figures and the opening balance
sheet at 1 January 2013 were adjusted and made com-
parable.