BMW 2007 Annual Report Download - page 88

86 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 recoverability of the carrying amount of
intangible assets (including capitalised development
costs and goodwill) and property, plant and equip-
ment is tested regularly for impairment in accordance
with IAS 36 (Impairment of Assets) on the basis of
cash generating units. This relates primarily to capi-
talised development costs and property, plant and
equipment connected with vehicle projects. If there
is no indication of impairment during the year, an
annual impairment test is carried out at the year-end.
An impairment loss is recognised when the recover-
able amount (defined as the higher of the asset’s net
selling price and its value in use) is lower than the
carrying amount. The value in use is determined on
the basis of a present value computation. If the rea-
son for the previously recognised impairment loss
no longer exists, the impairment loss is reversed up
to the level of its rolled-forward depreciated or amor-
tised cost.
Investments accounted for using the equity
method are measured at the Group’s share of equity
taking account of fair value adjustments on acquisi-
tion unless the investment is impaired.
Investments in non-consolidated Group com-
panies reported in other investments are measured
at cost or, if lower, at their fair value.
Investments in other companies are measured
at their quoted market price or fair value. When, in
individual cases, these values are not available or
cannot be determined reliably, investments in other
companies are measured at cost.
Non-current marketable securities are meas-
ured according to the category of financial asset to
which they are classified. No held-for-trading finan-
cial assets are included under this heading.
Financial assets are accounted for on the basis
of the settlement date. On initial recognition, they
are measured at acquisition cost, including transac-
tion costs.
Subsequent to initial recognition, available-for-
sale and held-for-trading financial assets are
measured at fair value. When market prices are not
available, the fair value of available-for-sale financial
assets is measured using appropriate valuation
techniques e.g. discounted cash flow analysis based
on market information available at the balance sheet
date.
Available-for-sale assets include financial assets,
securities and shares in securities funds. This cate-
gory includes all non-derivative financial assets which
are not classified as loans and receivables or held-
to-maturity investments or as items measured at
fair value through profit and loss.
Loans and receivables which are not held for
trading, held-to-maturity financial investments and
all financial assets for which published price quota-
tions in an active market are not available and whose
fair value cannot be determined reliably, are meas-
ured, to the extent that they have a fixed term, at
amortised cost, using the effective interest method.
When the financial assets do not have a fixed term,
they are measured at acquisition cost.
In accordance with IAS 39 (Financial Instruments:
Recognition and Measurement), assessments are
made regularly as to whether there is any objective
evidence that a financial asset or group of assets
may be impaired. Impairment losses identified after
carrying out an impairment test are recognised as
an expense. Gains and losses on available-for-sale
financial assets are recognised directly in equity until
the financial asset is disposed of or is determined to
be impaired, at which time the cumulative loss pre-
viously recognised in equity is included in net profit
or loss for the period.
With the exception of derivative financial instru-
ments, all receivables and other current assets re-
late to loans and receivables which are not held for
trading and are measured at amortised cost. Receiv-
ables with maturities of over one year which bear
no or a lower than market interest rate are discounted.
Appropriate impairment losses are recognised to
take account of all identifiable risks.
Receivables from sales financing comprise
receivables from retail customer, dealer and lease
financing.
Impairment losses on receivables and loans
re-
lating to the financial services business are recognised
using a uniform methodology that is applied through-
out the Group and meets the requirements of IAS 39.
This methodology results in the recognition of im-
pairment losses on individual assets and groups of
assets. If there is objective evidence of impairment,
the BMW Group recognises impairment losses on
the basis of individual assets. Within the customer
retail business, the existence of overdue balances
or the incidence of similar events in the past are ex-
amples of such objective evidence. In the event of
overdue receivables, impairment losses are always