281 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 Revenues from customer contracts include in particular reve- nues from the sale of products (primarily new and pre-owned ve- hicles and related products) as well as revenues from services. Revenues are recognised when control of the product is trans- ferred to the dealership or retail customer, whereby the point in time of transfer is becoming increasingly important due to the phased introduction of the direct sales model. In the case of sales of products, control is transferred and revenue therefore recog- nised as a general rule at the point in time when the risks and rewards of ownership are transferred. Revenues are stated net of settlement discount, bonuses and rebates as well as interest and residual value subsidies. The consideration arising from these sales is usually due for payment in advance, immediately or within 30 days. In exceptional cases, a longer payment may also be agreed. In the case of services, control is transferred over time. Consideration for the rendering of services to customers usually falls due for payment at the beginning of a contract and is therefore deferred as a contract liability. The deferred amount is released over the service period and recognised as revenue in the income statement. As a general rule, amounts are released on the basis of the expected expense trend, as this best reflects the performance of the service. If the sale of products includes a determinable amount for services (multiple-component con- tracts), the related revenues are deferred and recognised as in- come in the same way. Variable consideration components, such as bonuses, are measured at the expected value, and in the case of multiple-component contracts, allocated to all performance obligations unless directly attributable to the sale of a vehicle. Revenues from the sale of products, for which repurchase ar- rangements are in place, are not recognised immediately in full. Instead, revenues are either recognised proportionately or the difference between the sales and repurchase price is recognised in instalments over the term of the contract depending on the na- ture of the agreement. In the case of vehicles sold to a dealership that are expected to be repurchased in a subsequent period as part of leasing business, revenues are not recognised at Group level at the time of the sale of the vehicle. Instead, assets and liabilities arising from rights of return are recognised in the bal- ance sheet for these vehicles. Revenues from leases of own-manufactured vehicles are recog- nised at Group level in accordance with the requirements for manufacturer or dealer leases. In the case of operating leases, revenues from lease payments are recognised on a straight-line basis over the lease term. Finance leases, on the other hand, are accounted for as a sale. At the lease commencement date, rev- enues are recognised at the amount of the fair value of the leased asset and reduced by any unguaranteed residual value of vehi- cles that are expected to be returned to the Group at the end of the lease term. In addition, initial direct costs are recognised as cost of sales at the lease commencement date. Revenues also include interest income from financial services. In- terest income arising on finance leases as well as on retail cus- tomer and dealership financing is recognised using the effective interest method and reported as interest income on credit financ- ing within revenues. The BMW Group offers various products that meet the definition of an insurance contract in accordance with IFRS 17. However, for the majority of these products, either an exemption applies (e.g. for warranty agreements) or the insurance arrangements qualify as fixed-fee service contracts, which continue to be ac- counted for in accordance with IFRS 15 due to the option availa- ble in IFRS 17. In some markets, however, products (e.g. com- prehensive vehicle insurance) are offered that are required to be accounted for in accordance with IFRS 17. These contracts are recognised using the so-called premium allocation approach. In- surance premiums arising on insurance contracts are presented in other revenues. Public sector grants are not recognised until there is reasonable assurance that the conditions attaching to them have been com- plied with and the grants will be received. The resulting income is recognised in cost of sales over the periods in which the costs occur that they are intended to compensate. Government grants received for assets are deducted from the carrying amount of the relevant assets, and recognised in profit or loss over the respec- tive useful lives of the assets in the form of reduced deprecia- tion/amortisation. For information on the accounting treatment of government grants for assets granted before 31 Decem- ber 2022, please refer to the disclosures provided in ↗ note [37]. Earnings per share are calculated as follows: basic earnings per share are calculated for common and preferred stock by dividing the net profit for the year (after non-controlling interests) that is attributable to each category of stock, by the average number of shares of each category in circulation. Net profit for the year is accordingly allocated to the different categories of stock. The portion of the net profit that 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 proposals or resolutions for common and preferred stock. Diluted earnings per share are calculated and separately disclosed in accordance with IAS 33. Intangible assets are measured on initial recognition at acquisi- tion or manufacturing cost. Subsequently, intangible assets with finite useful lives are amortised on a straight-line basis over their useful lives of between three and 20 years. Impairment losses are recognised where necessary. Intangible assets with indefi- nite useful lives are tested annually for impairment. Internally generated intangible assets mainly comprise development costs for vehicle, module and architecture projects.