BMW 2007 Annual Report Download - page 87

85
in years
Factory and office buildings, distribution facilities and residential buildings 8 to 50
Plant and machinery 5 to 10
Other equipment, factory and office equipment 3 to 10
preferred stock. Diluted earnings per share would
have to be disclosed separately.
Purchased and internally-generated intangible
assets are recognised as assets in accordance with
IAS 38 (Intangible Assets), where it is probable that
the use of the asset will generate future economic
benefits and where the costs of the asset can be
determined reliably. Such assets are measured at
acquisition and/or manufacturing cost and, to the
extent that they have a finite useful life, amortised on
a straight-line basis over their estimated useful lives.
With the exception of capitalised development costs,
intangible assets are generally amortised over their
estimated useful lives of between three and five
years. Intangible assets with infinite useful lives are
assessed regularly for recoverability and their carry-
ing amounts are reduced to the recoverable amount
in the event of impairment.
Development costs for vehicle and engine
projects are capitalised at manufacturing cost, to the
extent that costs can be allocated reliably and both
technical feasibility and successful marketing are
assured. It must also be probable that the develop-
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation.
The cost of internally constructed plant and
equipment comprises all costs which are directly
attributable to the manufacturing process and an
appropriate portion of production-related overheads.
This includes production-related depreciation and
an appropriate proportion of administrative and social
costs.
Financing costs are not included in acquisition
or manufacturing cost.
Non-current assets also include assets relating
to leases. The BMW Group uses property, plant
and equipment as lessee and also leases out assets,
mainly vehicles produced by the Group, as lessor.
IAS 17 (Leases) contains rules for determining, on
the basis of risks and rewards, the economic owner
of the assets. In the case of finance leases the
ment expenditure will generate future economic
benefits. Capitalised development costs comprise
all expenditure that can be attributed directly to the
development process, including development-re-
lated overheads. Capitalised development costs
are amortised on a systematic basis, following the
commencement of production, over the estimated
product life which is generally seven years.
All items of property, plant and equipment are
considered to have finite useful lives. They are rec-
ognised at acquisition or manufacturing cost less
scheduled depreciation based on the estimated
useful lives of the assets. Depreciation on property,
plant and equipment reflects the pattern of their
usage and is generally computed using the straight-
line method. Components of items of property,
plant and equipment with different useful lives are
depreciated separately.
Expenditure on low value non-current assets
is generally written off in full in the year of acquisi-
tion.
Systematic depreciation is based on the fol-
lowing useful lives, applied throughout the Group:
assets are attributed to the lessee and in the case
of operating leases the assets are attributed to the
lessor.
In accordance with IAS 17, assets leased under
finance leases are measured at their fair value at the
inception of the lease or at the present value of the
lease payments, if lower. The assets are depreciated
using the straight-line method over their estimated
useful lives or over the lease period, if shorter. The
obligations for future lease instalments are recog-
nised as financial liabilities.
Where Group products are recognised by BMW
Group leasing companies as leased assets under
operating leases, they are measured at manufacturing
cost. All other leased products are measured at ac-
quisition cost. All leased products are depreciated
using the straight-line method over the period of the
lease to the lower of their imputed residual value or
estimated fair value.