Volvo 2004 Annual Report Download - page 94

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92 The Volvo Group
Notes to consolidated financial statements
Comprehensive income (loss) 2002 2003 2004
Net income (loss) in accordance with US GAAP (6,265) 3,979 14,416
Other comprehensive income (loss), net of income taxes
Translation differences (2,222) (606) (172)
Unrealized gains and (losses) on securities (SFAS 115):
Unrealized gains (losses) arising during the year (2,425) 3,366 (14)
Less: Reclassification adjustment for (gains) and losses included in net income 7,558 62 (3,285)
Additional minimum liability for pension obligations (SFAS 87) (3,234) 186 (471)
Fair value of cash-flow hedges (SFAS 133) – (11) 13
Other (165) (12) (1)
Other comprehensive income (loss), subtotal (488) 2,985 (3,930)
Comprehensive income (loss) in accordance with US GAAP (6,753) 6,964 10,486
Supplementary US GAAP information
Classification. In accordance with SFAS 95, “cash and cash equiva-
lents” comprise only funds with a maturity of three months or less
from the date of purchase. Some of Volvo’s liquid funds (see Notes
19 and 20) do not meet this requirement. Consequently, in accord-
ance with SFAS 95, changes in this portion of liquid funds should be
reported as investing activities.
Income from investments in associated companies is reported
before income taxes in accordance with Swedish accounting prin-
ciples, and after income taxes in accordance with US GAAP. Income
taxes attributable to associated companies amounted 5 (30: 65).
Under Swedish GAAP all sales not qualifying for revenue recogni-
tion are treated in the same way as deferred income. Under US
GAAP sales that are made to companies who in turn lease out the
equipment under operating leases are accounted for as financing
transactions rather than as deferred income. The total impact of rev-
enue recognition is an additional 433 as assets under operating
leases, 270 reduced residual value liability and 783 as interest bear-
ing liablilities. The net income effect is negative 73.
Variable Interest Entities, In accordance with US GAAP FIN -46
certain entities should be consolidated where the Group is the
Primary Beneficiary of the Variable Interest Entity. Volvo adopted FIN
46 as per January 1, 2004. In Volvo this has had a limited impact
and a minor number of entities have been consolidated. The majority
of the consolidated entities have been so called Franchisees to Volvo
Rents. The balance sheet impact is 42 and the additional turnover
112.
J. Income taxes on U.S. GAAP adjustments. Deferred taxes are
generally reported for temporary differences arising from differences
between US GAAP and Swedish accounting principles. During 2002,
a new tax legislation was enacted in Sweden which removed the
possibility to offset capital losses on investments in shares held for
operating purposes against income from operations. As a result of
the new legislation, a tax expense of 2,123 was charged to Volvo’s
net income under US GAAP to reduce the carrying value of deferred
tax assets relating to investments in shares classified as “available-
for-sale”.