Financial Accounting Blog

Friday, February 20, 2004

BMW Switches to International Accounting Standards from German accounting standards.
The company's sales for 2002 will rise by 129 million euros ($161 million) as Munich-based BMW includes revenue from fees for handling credit cards. The cost of sales will rise by 901 million euros. Previously the carmaker's cost of sales had been manufacturing costs. It will now include freight costs and risk provisions.

The higher cost of sales reduces BMW's gross margin to 23.5 percent from 25.4 percent. The company's pretax profit margin remains unchanged at 7.8 percent. The gross margin will remain lower in the coming years as the accounting changes are permanent.