Volvo 1998 Annual Report Download - page 79

Download and view the complete annual report

Please find page 79 of the 1998 Volvo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

77
Profit for the year Shareholders’ equity
Goodwill 1996 1997 1998 1996 1997 1998
Goodwill in accordance with Swedish GAAP,
December 31 (195) (196) (512) 12,163 3,075 5,607
Items affecting reporting of goodwill:
Volvo Trucks with regard to
exchange of shares with Renault (438) (438) (439) 877 439 –
Acquisition of Volvo Construction
Equipment Corporation (91) (91) (91) 1,681 1,590 1,499
Net change in accordance with U.S. GAAP (529) (529) (530) 2,558 2,029 1,499
Approximate goodwill in accordance with
U.S. GAAP, December 31 (724) (725) (1,042) 4,721 5,104 7,106
FAS 115- Tax and FAS 115-
Summary of debt and equity securities Carrying Market adjustment, minority adjustment,
available for sale and trading amount value gross interests net
Trading, December 31, 1998 3,350 3,681 331 (92) 239
Trading, January 1, 1998 8,369 8,584 215 (60) 155
Change 1998 116 2(32) 84
Available for sale
Marketable securities 2,593 2,654 61 (17) 44
Shares and participations 1,110 851 (259) 72 (187)
Available for sale
December 31, 1998 3,703 3,505 (198) 155 (143)
January 1, 1998 4,597 8,344 3,747 (1,049) 2,698
Change 1998 (3,945) 1,104 (2,841)
1 Adjustment of shareholders’ equity in accordance with U.S. GAAP before tax effects.
2 Adjustment of profit for the year in accordance with U.S. GAAP before tax effects.
E. Shares and participations. In calculating Volvo’s share
of earnings and shareholders’ equity in associated com-
panies in accordance with U.S. GAAP, account has been
taken of the differences between the accounting of these
companies – in accordance with Volvo’s principles – and
U.S. GAAP.
Income from investments in associated companies
is reported before tax in accordance with Swedish
accounting principles, and after tax in accordance with
U.S. GAAP. Taxes attributable to associated companies
amounted to 60 (103; 68).
F. Interest expense. In accordance with U.S. GAAP,
interest expense incurred in connection with the finan-
cing of the construction of property and other qualifying
assets is capitalized and amortized over the economic
life of the pertinent assets.
G. Leasing. Certain leasing transactions are reported
differently in accordance with Volvo’s principles, com-
pared with U.S. GAAP. The differences pertain to sale-
leaseback transactions prior to 1997.
H. Debt and equity securities. In accounting in ac-
cordance with U.S. GAAP, Volvo applies SFAS 115:
“Accounting for Certain Investments in Debt and Equity
Securities.” SFAS 115 addresses the accounting and
reporting for investments in equity securities that have
readily determinable fair market values, and for all debt
securities. These investments are to be classified as either
“held-to-maturity” securities that are reported at cost,
“trading” securities that are reported at fair value with
unrealized gains or losses included in earnings, or “avail-
able-for-sale” securities, reported at fair value, with un-
realized gains or losses included in shareholders’ equity.
As of December 31, 1998, unrealized losses after
deducting for unrealized gains in “available-for-sale”
securities amounted to 198 (gains 3,747; gains 1,661).
The change between 1997 and 1998 pertains mainly to
divestment of the shareholding in Pharmacia & Upjohn.
Sale of “available-for-sale” securities in 1998 provided
approximately SEK 6.6 billion (6,4; 13,6) and the capital
gain, before tax, on sales of these securities amounted
to approximately SEK 4.5 billion (1,0; 8.3) in 1998.
1 Including write-downs