Volvo 2006 Annual Report Download - page 146

142 Financial information 2006
Parent Company AB Volvo
General information
Amounts in SEK M unless otherwise specifi ed. The amounts within
parentheses refer to preceding year.
Intra-Group transactions
Of the Parent Company’s net sales, 664 (567; 426) pertained to
Group companies while purchases from Group companies amounted
to 380 (356; 126).
Fees to auditors
Fees and other remunerations paid to external auditors for the fi s cal
year of 2006 totaled 28 (31; 26), of which 20 (10; 13) for auditing,
distributed between PricewaterhouseCoopers, 20 (10; 13) and
others, 0 (0; 0), and 8 (21; 13) related to non-audit services from
PricewaterhouseCoopers.
Note 1 Accounting principles
Note 2 Administrative expenses
Administrative expenses include depreciation of 1 (1; 1) of which 1 (1; 1) pertain to machinery and equipment and 0 (0; 0) to buildings.
Summarized reconciliation of shareholders’ equity
SEK M 040101 041231 050101
Shareholders’ equity according
to the Annual report of 2004 60,768 53,668 53,668
Revaluation of loans 235 283 283
Share-based payments – 14 14
Investments in listed
companies – – (501)
Shareholders’ equity
after change of account-
ing principle 61,003 53,965 53,464
Summarized reconciliation of net income
SEK M 2004
Income for the period according to
the Annual report of 2004 5,098
Revaluation of loans 66
Deferred taxes (18)
Income for the period after change
of accounting principle 5,146
The accounting principles applied by Volvo are described in Note 1
to the consolidated fi n ancial statements.
As of January 1, 2005, the Parent Company applies the Swedish
Financial Accounting Standards Council’s RR 32:05 Accounting for
legal entities, with retroactive restatement from January 1, 2004.
The Standard means that legal entities whose securities on the clos-
ing date are listed on a Swedish stock exchange or other authorized
marketplace as main rule shall apply the IFRS/IAS as applied in the
consolidated accounts. Comparison fi gures for 2004, in tables and
the notes, were restated where applicable in the Annual report of
2005. IAS 39 Financial Instruments is applied by the Parent Com-
pany as of January 1, 2005. The Parent Company also applies RR
32:06 with reference to the exception in the application of IAS 39
which concerns accounting and valuation of fi nancial contracts of
guarantee in favour of subsidiaries and associated companies.
The Volvo Group has adopted IAS 19 Employee Benefi ts in its
fi n a ncial reporting. The parent company is still applying the prin-
ciples of FAR’s Recommendation No. 4 “Accounting of pension liabil-
ities and pension costs” as in previous years. Consequently there are
differences between the Volvo Group and the Parent Company in
the accounting for defi ned-benefi t pension plans as well as in valua-
tion of plan assets invested in the Volvo Pension Foundation.
The difference between depreciation according to plan and
depreciation allowable for tax purposes is reported as accumulated
additional depreciation, which is included in untaxed reserves. In the
consolidated balance sheet a split is made between deferred tax liab-
ility and equity capital.
Reporting of Group contributions is in accordance with a state-
ment issued by a special committee of the Swedish Financial
Accounting Standards Council. Group contributions are reported
among Income from investments in Group companies.
For the Parent Company the most important impact of RR 32:05
has been in the following three areas:
Hedge accounting
Hedge accounting in a legal entity of net investments in foreign
operations is not permitted according to RR 32:05. The Parent Com-
pany has in previous years used a loan to hedge shares in a foreign
subsidiary in the corresponding currency. This loan has been
reported at historical rate and not been revaluated. According to IAS
21 loans in foreign currencies shall be reported at closing rate. The
transition effect on January 1, 2004, is reported in the shareholders’
equity whereas revaluation as of 2004 is recognized in the income
statement.
Share-based Payments
The share-based incentive programs adopted at the Annual General
Meeting as from 2004 are covered by IFRS 2 Share-based payments.
Investments in other companies
In accordance with IAS 39, all investments in companies, except if
these investments are classifi ed as associated companies, should be
reported in the balance sheet at fair value. The transition effect on
January 1, 2005, attributable to this accounting change is related to
Volvo’s investment in Deutz AG.
A further description of the most important changes for the Par-
ent Company by the application of RR 32:05 is found below in the
tables of reconciliation of shareholders’ equity and net income.
Notes and comments