2 Cost of sales
Cost of sales includes interest expenses of €2,270 million (previous year: €1,961 million) attributable to the financial services business.
This item also includes impairment losses on intangible assets (primarily development costs), property, plant and equipment (primarily other equipment, operating and office equipment), and lease assets in the amount of €1,165 million (previous year: €1,185 million). The impairment losses totaling €631 million (previous year: €700 million) recognized during the reporting period on intangible assets and items of property, plant and equipment result in particular from lower values in use of various products in the Passenger Cars segment, from market and exchange rate risks, and in particular from expected declines in volumes. The impairment losses on lease assets in the amount of €534 million (previous year: €485 million) are predominantly attributable to the Financial Services segment. They are based on constantly updated internal and external information that is factored into the forecast residual values of the vehicles. Thereof, €24 million (previous year: €37 million) are reported in current lease assets.
To make the presentation more consistent and easier to compare, the way income from the reversal of provisions and accrued liabilities is reported was adjusted during the implementation of IFRS 15; these items have been allocated to those functional areas in which they were originally recognized. Prior-year figures adjusted (see disclosures on IFRS 15).
Government grants related to income amounted to €466 million in the fiscal year (previous year: €424 million) and were generally allocated to the functional areas.