Volvo 2005 Annual Report Download - page 131

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Volvo Group 2005 127
Adjustment from carrying amount SFAS 115 SFAS 115
2004 to fair value according to IFRS gross adjustment 2004-12-31 IFRS adjustment gross adjustment 2005-01-01
Available for sale (494) 494 0
(494) 494 0
The carrying values and fair values for the securities were distributed
as follows:
December 31, 2004
Carrying value Fair value
Available for sale
Marketable securities 387 387
Shares and convertible debenture loan 677 183
D. Restructuring costs. Volvo reports restructuring costs in
accordance with IAS 37 Provisions, contingent liabilities and contin-
gent assets. Restructuring costs are reported in the year restructur-
ing plans have been approved by the Boards of each company and
communicated to all affected parties. The accounting standards for
recoginizing restructuring costs under US GAAP, SFAS 146
“Accounting for costs Associated with Exit or Disposal Activities,” are
more strict. Restructuring costs are, in some cases, accounted for
on an accrual basis under US GAAP while under IFRS a provision is
booked.
During 2004, Renault Trucks industrial relocation was treated dif-
ferently under US GAAP, compared with IFRS. The restructuring
costs will be distributed under US GAAP during 2004–2006 while
they under IFRS was expensed in its entirety in 2004.
E. Provisions for post-employment benefi ts. Effective 2004,
provisions for post-employment benefi ts in Volvo’s consolidated
fi nancial statements are accounted for in accordance with IAS 19,
Employeee benefi ts. See Notes 1 and 24. In accordance with US
GAAP, post-employment benefi ts should be accounted for in
accordance with SFAS 87, “Employers Accounting for Pensions” and
SFAS 106, “Employers’ Accounting for Post-retirement Benefi ts
Other than Pensions”. The differences between Volvo’s accounting
principles according to IFRS and US GAAP pertain to different tran-
sition dates, recognition of past service costs and minimum liability
adjustments.
F. Product development. Volvo applies IAS 38 Intangible Assets.
In accordance with IAS 38, expenditures for development of new
products, production and information systems should be recognized
as intangible assets if such expenditures with a high degree of cer-
tainty will result in future fi nancial benefi ts for the company. The
acquisition value of such intangible assets should be amortized over
the useful lives of the assets. Under US GAAP, all expenditures for
development of new and existing products should be expensed as
incurred.
Net periodical costs for post-employment benefi ts 2004 2005
Net periodical costs in accordance with IFRS 4,401 3,736
Net periodical costs in accordance with US GAAP 4,687 4,043
Adjustment of this year’s income in accordance with US GAAP, before income taxes (286) (307)
Net provisions for post-employment benefi ts Dec 31, 2004 Dec 31, 2005
Net provisions for post-employment benefi ts in accordance with IFRS (14,332) (11,462)
Difference in unrecognized actuarial (gains) and losses 5,266 5,762
Difference in unrecognized past service costs 602 686
Minimum liability adjustments (4,542) (5,458)
Net provisions for post-employment benefi ts in accordance with US GAAP (13,006) (10,472)