BMW 2012 Annual Report Download - page 92

92
78 GROUP FINANCIAL STATEMENTS
78 Income Statements
78 Statement of
Comprehensive Income
80 Balance Sheets
82 Cash Flow Statements
84 Group Statement of Changes
in Equity
86 Notes
86 Accounting Principles
and Policies
100 Notes to the Income
Statement
107 Notes to the Statement
of Comprehensive Income
108 Notes to the Balance Sheet
129 Other Disclosures
145 Segment Information
derived from long-term forecasts approved by manage-
ment and which cover a planning period of six years.
The long-term forecasts themselves are based on detailed
forecasts drawn up at an operational level. For the pur-
poses of calculating cash flows beyond the planning
period, the asset’s assumed residual value does not take
growth into account. Forecasting assumptions are
con-
tinually brought up to date and take account of
eco-
nomic developments and past experience. Cash flows of
the Automotive and Motorcycles CGUs are discounted
using a risk-adjusted pre-tax cost of capital (WACC) of
12.0 % (2011: 12.0 %). In the case of Financial Services
CGU, a sector-compatible pre-tax cost of equity capital
of 13.4 % (2011: 12.7 %) is applied.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed up
to the level of the recoverable amount, capped at the
level of rolled-forward amortised cost. This does not
apply to goodwill: previously recognised impairment
losses on goodwill are not reversed.
Investments accounted for using the equity method are
(except when the investment is impaired) measured at
the Group’s share of equity taking account of fair value
adjustments on acquisition. Investments accounted
for using the equity method comprise joint ventures and
significant associated companies.
Investments in non-consolidated Group companies
and interests in associated companies not accounted
for using the equity method are reported as Other
investments and measured at cost or, if lower, at their
fair value.
Participations are measured at their quoted market price
or fair value. When, in individual cases, these values
are not available or cannot be determined reliably, par-
ticipations are measured at cost.
Non-current marketable securities are measured accord-
ing
to the category of financial asset to which they
are classified. No held-for-trading financial assets are in-
cluded under this heading.
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Once the BMW
Group becomes party to such to a contract, the financial
instrument is recognised either as a financial asset or
as a financial liability.
Financial assets are accounted for on the basis of the set-
tlement
date. On initial recognition, they are measured
at their fair value. Transaction costs are included in the
fair value unless the financial assets are allocated to the
category “financial assets measured at fair value through
profit or loss”.
Subsequent to initial recognition, available-for-sale and
held-for-trading financial assets are measured at their
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 avail-
able at the balance sheet date.
Available-for-sale assets include non-current invest-
ments,
securities and investment fund shares. 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
and held-to-maturity financial investments with a fixed
term are measured at amortised cost using the effective
interest method. All financial assets for which pub-
lished
price quotations in an active market are not avail-
able and whose fair value cannot be determined reliably
are required to be measured at 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 im-
paired. 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 previously recog-
nised in equity is reclassified to profit or loss for the
period.