283 BMW Group Report 2024 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor’s Report Remuneration Report Other Information Notes to the Group Financial Statements In conjunction with the impairment tests for cash-generating units, sensitivity analyses are performed for the main assump- tions in order to rule out that possible changes to the assump- tions used to determine the recoverable amount would result in the requirement to recognise an impairment loss. Even in the case of a 10% deterioration in the individual measurement as- sumptions, the need to recognise an impairment loss did not arise. All items of property, plant and equipment are measured at ac- quisition or manufacturing cost less accumulated depreciation and accumulated impairment losses. The cost of internally constructed plant and equipment com- prises all costs which are directly attributable to the manufactur- ing process as well as an appropriate proportion of production- related overheads. This includes production-related depreciation and amortisation as well as an appropriate proportion of admin- istrative and social costs. Financing costs are not included in ac- quisition or manufacturing cost unless they are directly attributa- ble to the asset. The carrying amount of items of depreciable property, plant and equipment is written down according to scheduled usage-based depreciation – as a general rule on a straight-line basis – over the useful lives of the assets. Depreci- ation is recorded as an expense in the income statement. The following useful lives are applied throughout the BMW Group: in years Factory and office buildings, residential buildings, fixed installations in buildings and outside facilities 8 to 50 Plant and machinery 3 to 30 Other facilities, factory and office equipment 2 to 25 The useful lives of plant and equipment are reviewed regularly and extended or shortened as necessary. This review also takes account of the impact of climate-related aspects on useful lives, for example due to changes in demand patterns or regulatory re- quirements. In addition to the assumptions used for long-term corporate planning as described above, product-relevant deci- sions taken during the year are also considered. Climate-related aspects have an indirect impact on the utilisation of property, plant and equipment. Adjustments to the useful lives of items of plant and machinery are avoided by means of by a combination of flexible manufacturing arrangements (independent of drivetrain type and capable of handling all vehicle generations) as well as asset-preservation measures. The useful lives of plant and machinery that are used exclusively for internal combustion vehicle production are also covered by up-to-date planning as- sumptions. For machinery used in multiple-shift operations, de- preciation rates are increased to account for the additional utili- sation. If there is any indication of impairment of property, plant and equipment, an impairment test is performed as described above for intangible assets. A lease arises for IFRS 16 purposes either when an actual legal rental/lease agreement for property, plant and equipment is in place or when other contractual arrangements are in place that are equivalent to a lease in substance. Depending on the specific facts and circumstances of each individual case, power purchase agreements and long-term supply contracts for battery cells may also constitute a lease. The BMW Group recognises a right-of-use asset and a liability for the outstanding lease payments with effect from the date on which the leased asset becomes available for use by the BMW Group. The cost of the right-of-use asset is the sum of the amount at which the lease liability is initially measured, any lease payments made at or before the lease commencement date, any initial direct costs incurred by the lessee and the estimated costs of dismantling, removing or restoring the leased asset. Lease incentives granted by the lessor are deducted. Right-of-use as- sets are depreciated on a straight-line basis over the shorter of the useful life of the leased asset and the expected lease term. If ownership of the leased asset is automatically transferred at the end of the lease term or the exercise of a purchase option is re- flected in the lease payments, the right-of-use asset is depreci- ated on a straight-line basis over the expected useful life of the leased asset. Right-of-use assets are reported in the balance sheet within the relevant line items for property, plant and equip- ment. The depreciation expense on right-of-use assets is re- ported in the income statement in cost of sales as well as in sell- ing and administrative expenses. The lease liability is measured on initial recognition at the present value of the future lease payments. Subsequent to initial recog- nition, the carrying amount of the lease liability is increased to reflect interest on the lease liability and reduced, without income statement impact, by the lease payments made. Lease liabilities are reported within financial liabilities, while interest expense is reported as part of net interest result. In the cash flow statement, both the repayment portion and the interest portion of lease pay- ments are shown as cash outflows from financing activities. The lease payments to be taken into account to measure the right-of-use asset and the lease liability comprise fixed pay- ments, variable lease payments that depend on an index or an interest rate as well as amounts expected to be payable under residual value guarantees. If it is reasonably certain that a pur- chase or lease extension option will be exercised, the relevant payments are also included. Payments for periods for which the lessee has an option to terminate a lease unilaterally are only in- cluded in the lease payments if it is reasonably certain that the termination option will not be exercised. For the purposes of as- sessing options, the BMW Group takes account of all facts and circumstances that create an economic incentive to exercise or not to exercise the option.