BMW 2007 Annual Report Download - page 86

84 Group Financial Statements
73 Group Financial Statements
73 Income Statements
74 Balance Sheets
76 Cash Flow Statements
78 Group Statement of Changes
in Equity
79 Statement of Income and
Expenses recognised directly
in Equity
80 Notes
80 – Accounting Principles
and Policies
89 – Notes to the Income
Statement
96 – Notes to the Balance Sheet
117 – Other Disclosures
131 – Segment Information
The exchange rates of those currencies which have a material impact on the Group financial statements
were as follows:
Accounting principles
The financial statements of BMW AG and of its sub-
sidiaries in Germany and elsewhere have been
prepared for consolidation purposes using uniform
accounting policies in accordance with IAS 27.
Revenues from the sale of products are recog-
nised when the risks and rewards of ownership of
the goods are transferred to the customer, the sales
price is agreed or determinable and receipt of pay-
ment can be assumed. Revenues are stated net of
discounts, allowances, settlement discount and
rebates. In the case of long-term construction work,
revenues are generally recognised in accordance
with IAS 18 (Revenue) and IAS 11 (Construction
Contracts) on the basis of the stage of completion
of work performed using the percentage of com-
pletion method. Revenues also include lease
rentals and interest income from financial services.
Revenues for the Financial Operations sub-group
also include the interest income earned by Group
financing companies.
If the sale of products includes a determinable
amount for subsequent services (multiple-
com-
ponent contracts), the related revenues are deferred
and recognised as income over the period of the
contract. Amounts are normally recognised as in-
come by reference to the expected pattern of related
expenditure.
Profits arising on the sale of vehicles for which
a Group company retains a repurchase commitment
(buy-back contracts) are not recognised until such
profits have been realised. The vehicles are included
in inventories and stated at cost.
Cost of sales comprises the cost of products
sold and the acquisition cost of purchased goods
sold. It includes all directly attributable material and
production costs and production overheads, includ-
ing depreciation/amortisation of property, plant and
equipment and intangible assets relating to produc-
tion and write-downs on inventories. Cost of sales
also includes freight and insurance costs relating to
deliveries to dealers and agency fees on direct sales.
Expenses which are directly attributable to the finan-
cial
services business and interest expense from re-
financing
the entire financial services business, in-
cluding the expense of risk provisions and impairment
losses, are reported in cost of sales. Cost of sales for
the Financial Operations sub-group also includes
the interest expense of Group financing companies.
Research costs and development costs which
are not capitalised are recognised as an expense
when incurred.
In accordance with IAS 20 (Accounting for
Government Grants and Disclosure of Government
Assistance), public sector grants are not recognised
until there is reasonable assurance that the con-
ditions attaching to them have been complied with
and the grants will be received. They are recognised
as income over the periods necessary to match
them with the related costs which they are intended
to compensate.
Basic earnings per share are computed in ac-
cordance with IAS 33 (Earnings per Share). Undiluted
earnings per share are calculated for common and
preferred stock by dividing the net profit after mi-
nority interests, as attributable to each category of
stock, by the average number of outstanding shares.
The net profit is accordingly allocated to the different
categories of stock. The portion of the Group net
profit for the year which is not being distributed is
allocated to each category of stock based on the
number of outstanding shares. Profits available for
distribution are determined directly on the basis of
the dividend resolutions passed for common and
Closing rate Average rate
31.12.2007 31.12. 2006 2007 2006
US Dollar 1.46 1.32 1.37 1.26
British Pound 0.73 0.67 0.68 0.68
Chinese renminbi 10.70 10.29 10.42 10.02
Japanese Yen 163.77 156.88 161.28 146.06
Australian Dollar 1.67 1.67 1.64 1.67
[6]