BMW 2015 Annual Report Download - page 108

108
has no liabilities which are held for trading. Liabilities
from finance leases are stated at the present value of
Assumptions, judgements and estimations
The preparation of the Group Financial Statements in
accordance with IFRS requires management to make
certain assumptions and judgements and to use estimates
that can affect the reported amounts of assets and lia-
bilities,
revenues and expenses and contingent liabilities.
Major items requiring assumptions and estimations
are described below. The assumptions used are con-
tinuously
checked for their validity. Actual amounts
could differ from the assumptions and estimations used
if business conditions develop differently to the Group’s
expectations.
Estimations are required to assess the recoverability of
a cash-generating unit (CGU). If the recoverability of an
asset is being tested at the level of a CGU, assumptions
must be made with regard to future cash inflows and
outflows, involving in particular an assessment of the
forecasting period to be used and of developments
after that period. For the purposes of determining future
cash inflows and outflows, management applies
fore-
casting assumptions which are continually brought up
to date and regularly compared with external sources
of information. The assumptions used take account in
particular of expectations of the profitability of the
product portfolio, future market share developments,
macro-economic developments (such as currency, inter-
est rate and raw materials), the legal environment and
past experience.
The BMW Group regularly checks the recoverability of
its leased products. One of the main assumptions
re-
quired for leased products relates to their residual value
since this represents a significant portion of future cash
inflows. In order to estimate the level of prices likely to
be achieved in the future, the BMW Group incorpo-
rates
internally available historical data, current market
data and forecasts of external institutions into its cal-
culations.
Internal back-testing is applied to validate the
estimations made. Further information is provided in
note 24.
The bad debt risk relating to receivables from sales
financing is assessed regularly by the BMW Group. For
the future lease payments and disclosed under other
financial liabilities.
these purposes, the main factors taken into consideration
are past experience, current market data (such as the
level of financing business arrears), rating classes and
scoring information. Further information is provided
in
note 27.
The calculation of deferred tax assets requires assump-
tions
to be made with regard to the level of future tax-
able
income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast oper-
ating results and the impact on earnings of the reversal
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.
Current income taxes are computed throughout the
BMW Group in accordance with tax legislation appli-
cable
in each relevant country. In situations where a
permissible element of discretion has been applied
in determining the amount of a tax exposure to be
recognised in the financial statements, there is always
a
possibility that local tax authorities may reach a dif-
ferent conclusion.
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.
Estimations are required for the purposes of recognising
and measuring provisions for warranty obligations
(statutory, contractual and voluntary). In addition to
statutorily prescribed manufacturer warranties, the
BMW Group also offers various categories of warranty
7
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
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122
Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information