BMW 2002 Annual Report Download - page 105

001 BMW Group in figures
004 Report of the Supervisory Board
008 Supervisory Board
011 Board of Management
012 Group Management Report
031 BMW Stock
034 Corporate Governance
042 Group Financial Statements
106 BMW AG Financial Statements
112 BMW Group Annual Comparison
114 BMW Group Locations
116 Glossary
120 Index
104
Provisions
Pension commitments must be recognised in accor-
dance with HGB and IAS, measured at the level of
the expected future payments, on a discounted
basis. Under IAS, the projected unit credit method
must be applied, which also takes account of future
salary and pension increases. Under German ac-
counting rules, a number of actuarial methods can
be applied.
Other provisions may only be recognised under
IAS if an enterprise has a present obligation (legal or
constructive) to a third party and if it is probable
(more likely than not) that the obligation will be in-
curred. The recognition of deferred expense provi-
sions, as permitted by German accounting rules, is
not allowed under IAS. Provisions are measured for
HGB purposes on the basis of prudent management
judgement; for IAS purposes they must be meas-
ured at their most probable amount. IAS require that
long-term provisions are discounted.
Consolidated companies
The group reporting entity must be determined under
IAS using the control concept, which is based on the
underlying substance of the relationship. Under this
concept, control can arise even if the formal criteria
for control do not exist. For this reason, so-called
special purpose entities must also be consolidated
if a constructive ability to control another enterprise
exists. Under German accounting rules, the group
reporting entity is determined on the basis of the
concept of uniform management and the control
concept. This control concept lays more emphasis
on the legal situation.
Munich, 25 February 2003
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management