Volvo 2001 Annual Report Download - page 85

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81
Net income Shareholders’ equity
Goodwill 1999 2000 2001 1999 2000 2001
Goodwill in accordance with
Swedish GAAP, December 31 (398) (491) (1,058) 5,093 4,969 13,013
Items affecting reporting of goodwill:
Acquisition of Renault V.I. and
Mack Trucks Inc. – – (153) – – 2,899
Acquisition of Volvo Construction
Equipment Corporation (91) (91) (91) 1,408 1,317 1,226
Net change in accordance with U.S. GAAP (91) (91) (244) 11,408 1,317 4,125
Goodwill in accordance with
U.S. GAAP, December 31 (489) (582) (1,302) 6,501 6,286 17,138
1 Income under U.S. GAAP was in total 744 lower than under Swedish GAAP, including 244 due to higher goodwill amortization and
500 due to other differences in purchase accounting.
1Adjustment of shareholders’ equity in accordance with U.S. GAAP before tax effects.
2Adjustment of income in accordance with U.S. GAAP before tax.
FAS 115- Tax and FAS 115-
Summary of debt and equity securities Market adjustment, minority adjustment,
available for sale and trading Book value value gross interests net
Trading, December 31, 2001 11,862 11,745 (117) 133 (84)
Trading, January 1, 2001 7,175 7,211 36 1(10) 26
Change 2001 (153) 243 (110)
Available for sale
Marketable securities 1,652 1,654 2 (1) 1
Shares and convertible debenture loan 27,806 20,593 (7,213) 2,020 (5,193)
Available for sale
December 31, 2001 29,458 22,247 (7,211) 12,019 (5,192)
January 1, 2001 31,600 25,499 (6,101) 11,708 (4,393)
Change 2001 (1,110) 311 (799)
C. Shares and participations. In calculating Volvo’s share
of earnings and shareholders’ equity in associated com-
panies in accordance with U.S. GAAP, differences
between the accounting for these companies in accord-
ance with Volvo’s principles and U.S. GAAP have been
reflected.
Income from investments in associated companies is
reported before taxes in accordance with Swedish
accounting principles, and after tax in accordance with
U.S. GAAP. Taxes attributable to associated companies
amounted to 42 (244; 321).
D. Interest costs. In accordance with U.S. GAAP,
interest expense incurred in connection with the financ-
ing of the construction of property and other qualifying
assets is capitalized and amortized over the useful life of
the related assets. In Volvo’s consolidated accounts,
interest expenses are reported in the year in which they
arise.
E. Leasing. Certain leasing transactions are reported
differently in accordance with Volvo’s accounting principles
compared with U.S. GAAP. The differences pertain to
sale-leaseback transactions prior to 1997.
F. Investments in debt and equity securities. In accord-
ance with U.S. GAAP, Volvo applies SFAS 115: “Account-
ing for Certain Investments in Debt and Equity Secu-
rities.” SFAS 115 addresses the accounting and report-
ing 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 amortized cost,
“trading” securities that are reported at fair value with
unrealized gains or losses included in earnings, or
“available-for-sale” securities, reported at fair value, with
unrealized gains or losses included in shareholders’ equity.
As of December 31, 2001, unrealized losses after
deducting for unrealized gains in “available-for-sale”
securities amounted to 7,211 (6,101; 840). Sale of
“available-for-sale” shares in 2001 provided SEK 3.2 bil-
lion (–; –) and the capital gain, before tax, on sales of
these shares amounted to SEK 0.6 billion (–; –).
In 2001, AB Volvo acquired 100% of the shares in
Renault V.I. and Mack Trucks Inc. from Renault SA in
exchange for 15% of the shares in AB Volvo. Under
Swedish GAAP, the goodwill attributable to this acquisi-
tion was set at SEK 8.4 billion while under U.S. GAAP the
corresponding goodwill was set at SEK 11.5 billion. The
difference was mainly attributable to determination of the
purchase consideration. In accordance with Swedish
GAAP, when a subdidiary subsidiary is acquired through
the issue of own shares, the purchase consideration is
determined to based on the market price of the issued
shares at the time of the transaction is completed. In
accordance with U.S. GAAP, such a purchase considera-
tion is determined to based on the average market price
of the issued underlying shares prior to the public
announcementat the date the terms of the transaction are
agreed and publicly announced of the transaction. The
value of the goodwill includes value of other intangible
assets.