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102 Financial information 2007
Notes to consolidated fi nancial statements
Specifi cation of deferred tax assets
and tax liabilities 2006 2007
Deferred tax assets:
Unused tax loss carryforwards 1,935 1,257
Other unused tax credits 248 97
Intercompany profi t in inventories 526 666
Valuation allowance for doubtful receivables 463 589
Provisions for warranties 1,357 1,510
Provisions for residual value risks 398 371
Provisions for
post-employment benefi ts 2,701 2,876
Provisions for restructuring measures 17 23
Adjustment to fair value at
company acquisitions – 1,782
Fair value of derivative instruments:
Change of hedge reserves 3 127
Other deductible temporary differences 2,634 3,066
Deferred tax assets before
deduction for valuation allowance 10,282 12,364
Valuation allowance (213) (156)
Deferred tax assets after
deduction for valuation allowance 10,069 12,208
2006 2007
Deferred tax liabilities:
Accelerated depreciation on property,
plant and equipment 2,514 2,660
Accelerated depreciation on leasing assets 1,226 1,368
LIFO valuation of inventories 182 185
Capitalized product and
software development 2,113 2,021
Adjustment to fair value at
company acquisitions – 2,885
Untaxed reserves 635 1,008
Fair value of derivative instruments:
Change of hedge reserves 268 197
Other taxable temporary differences 890 2,228
Deferred tax liabilities 7,828 12,552
Deferred tax assets /liabilities, net1 2,241 (344)
1 Deferred taxes are partially recognized in the balance sheet on a net basis
after taking into account offsetting possibilities. Changes in tax rates during
2007 have been considered when measuring deferred tax assets and deferred
tax liabilities and have affected the income tax cost of the year. Changes in tax
rates are mostly related to Germany, though no material effect on the income
tax cost of the year.
The cumulative amount of undistributed earnings in foreign subsidiar-
ies, which Volvo currently intends to indefi nitely reinvest outside of
Sweden and upon which deferred income taxes have not been pro-
vided, is approximately SEK 43 billion (29) at year end. There are dif-
ferent taxation rules depending on country, some which have no tax
effect and some countries with withholding taxes. See Note 36 how
Volvo handles equity currency risk.
Note 13 Minority interests
Note 14 Intangible and tangible assets
Minority interests in income (loss) for the period and in shareholders’ equity consisted mainly of the minority interests in Volvo Aero Norge A/S
(22%), in Wuxi da Hao Power Co, Ltd (30%), in Berliet Maroc S.A (30%), in Shandong Lingong Construction Machinery Co, Ltd (30%) as well
as in Nissan Diesel America, Inc (50%) and Nissan Diesel South Africa (Pty) Ltd (20%).
Entrance
fees, Product and Other Total
industrial software intangible intangible
Intangible assets, acquisition costs Goodwill1 programs development assets assets
Value in balance sheet 2006 8,849 2,913 14,288 2,012 28,062
Capital expenditures – 110 2,057 35 2,202
Sales/scrapping – – (571) (9) (580)
Acquired and divested operations3 11,418 – 3,356 3,499 18,273
Translation differences (304) 4 (35) (1) (336)
Reclassifi cations and other 6 141 28 (149) 26
Value in balance sheet 2007 19,969 3,168 19,123 5,387 47,647