BMW 2014 Annual Report Download - page 100

100
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124
Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
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.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when the
BMW Group jointly carries out activities on the basis of
a contractual agreement with a third party that requires
the unanimous consent of both parties with respect to
all significant activities of the joint arrangement.
In the case of a joint operation, the parties that have joint
control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrange-
ment. Assets, liabilities, revenues and expenses of a
joint operation are recognised proportionately in the
Group Financial Statements on the basis of the BMW
Group’s rights and obligations.
Investments accounted for using the equity method
(joint ventures and associated companies) 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 and Joint Ventures). As a general rule, there is a
rebuttable assumption that the Group has significant in-
fluence
if it holds between 20 % and 50 % of the associated
company’s or joint venture’s voting power.
4
Sale of business
With the purchase of the ING Car Lease Group in
2011, the BMW Group also acquired Noord Lease B. V.,
Groningen. This entity was managed alongside Alphabet
Nederland B. V., Breda, as a second fleet leasing com-
pany in the Netherlands, with a strong regional focus
and a high proportion of private leasing. As part of an
evaluation of the strategic direction of fleet business
in the Netherlands, it was decided to focus on only one
company in this region. Accordingly, BMW AG’s Board
B. V., Groningen, was sold and therefore ceased to be a
consolidated company. In addition, Alphabet Belgium
N. V., Bornem, and Bavaria NTTBL Company Ltd.,
Dublin, were liquidated and ceased to be consolidated
companies. The British Motor Corporation Ltd.,
Bracknell, was wound up and ceased to be a consolidated
company.
of Management put up Noord Lease B. V., Groningen
for sale during the financial year 2014. At the end of
a bidding process, Noord Lease B. V., Groningen, was
sold to Noordlease
Midco B. V., Groningen. The pur-
chase agreement was signed in June 2014 and the
shares transferred in August 2014. The deconsolidation
of Noord Lease B. V., Groningen, gave rise in the third
quarter to a gain of € 7.4 million, which is included in
other operating income and expenses of the Financial
Services segment.
The Group reporting entity also changed by comparison
to the previous year as a result of the first-time consoli-
dation of six special purpose trusts and the deconsolida-
tion of eight special purpose entities.
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.
3