BMW 2013 Annual Report Download - page 98

98
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
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 rele-
vant 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 in-
come statement are also offset directly against accumu-
lated 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-
ment are recognised in the income statement in ac-
cordance
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:
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Closing rate Average rate
31. 12. 2013 31. 12. 2012 2013 2012
US Dollar 1.38 1.32 1.33 1.29
British Pound 0.83 0.81 0.85 0.81
Chinese Renminbi 8.34 8.23 8.16 8.11
Japanese Yen 144.55 114.10 129.70 102.63
Russian Rouble 45.29 40.41 42.34 39.91
Consolidation principles
The equity of subsidiaries is consolidated in accordance
with IFRS 3 (Business Combinations). IFRS 3 requires
that all business combinations are accounted for using
the acquisition method, whereby identifiable assets and
liabilities acquired are measured at their fair value at
acquisition date. An excess of acquisition cost over the
Group’s share of the net fair value of identifiable assets,
liabilities and contingent liabilities is recognised as good-
will 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
and profits between consolidated companies (intra-group
profits) are eliminated on consolidation.
Munich, was merged with BMW Finanz Verwaltungs
GmbH, Munich, in the fourth quarter and therefore
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
consoli-
dation of twelve special purpose trusts and one special
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 ac-
counted
for in accordance with the acquisition method.
Investments in other companies are accounted for as a
general rule using the equity method when significant
influence can be exercised (IAS 28 Investments in Asso-
ciates). As a general rule, there is a rebuttable
assump-
tion that the Group has significant influence if it holds
between 20 % and 50 % of the associated company’s and /
or joint venture’s voting power.
purpose securities fund and the deconsolidation of six
special purpose trusts.
The changes to the composition of the Group do not have
a material impact on the results of operations,
financial
position or net assets of the Group.
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