Volvo 2009 Annual Report Download - page 89

Specification of deferred tax assets
and tax liabilities 2008 2009
Deferred tax assets:
Unused tax loss carryforwards 1,839 8,939
Other unused tax credits 100 85
Intercompany profit in inventories 810 459
Allowance for inventory obsolescence 641 860
Valuation allowance for doubtful receivables 689 702
Provisions for warranties 1,596 1,071
Provisions for residual value risks 407 387
Provisions for
post-employment benefits 3,197 2,066
Provisions for restructuring measures 123 169
Adjustment to fair value at company
acquisitions 13 0
Fair value of derivative instruments 1,108 240
Other deductible temporary differences 5,725 6,851
Deferred tax assets before
deduction for valuation allowance 16,248 21,829
Valuation allowance (245) (296)
Deferred tax assets after
deduction for valuation allowance 16,003 21,533
Netting of deferred tax assets/liabilities (4,823) (8,938)
Deferred tax assets, net 11,180 12,595
2008 2009
Deferred tax liabilities:
Accelerated depreciation on property,
plant and equipment 3,885 4,046
Accelerated depreciation on leasing
assets 1,902 2,073
LIFO valuation of inventories 263 228
Capitalized product and
software development 4,244 3,724
Adjustment to fair value at company
acquisitions 503 0
Untaxed reserves 300 98
Fair value of derivative instruments 26 67
Other taxable temporary differences 1,960 2,340
Deferred tax liabilities 13,083 12,576
Netting of deferred tax assets/liabilities (4,823) (8,938)
Deferred tax liabilities, net 8,260 3,638
Deferred tax assets/liabilities, net12,920 8,957
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
2009 and 2010 have been considered when measuring deferred tax assets
and deferred tax liabilities and have affected the income tax cost of the
year. Deferred tax assets and liabilities have been measured to the tax rates
that are expected to apply to the period when the asset is realized or the lia-
bility is settled.
Note 14 Intangible and tangible assets
Note 13 Minority interests
Intangible assets, acquisition costs Goodwill1
Entrance
fees, industrial
programs
Product and
software
development
Other
intangible
assets2
Total
intangible
assets
Value in balance sheet 2008 24,813 3,569 23,290 6,987 58,659
Capital expenditures3–262 2,602 71 2,935
Sales/scrapping – 0 (274) (81) (355)
Acquired and divested operations441 0 3 (3) 41
Translation differences (1,035) 2(716) (314) (2,063)
Reclassifications and other 8 0 243 59 310
Value in balance sheet 2009 23,827 3,833 25,148 6,719 59,527
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 (15%) as well
as in Nissan Diesel South Africa (Pty) Ltd (20%).
The significant tax loss carryforwards are related to countries with long
or indefinite periods of utilization, mainly Sweden and France. Of the
total deferred tax asset for loss carryforwards 8,939, 4,653 relates to
Sweden with indefinite time of utilization. Volvo concider it to be most
certain that the Volvo Group will be able to generate sufficient income
in the coming years to utilize the tax loss carryforwards.
The cumulative amount of undistributed earnings in foreign sub-
sidiaries, which Volvo currently intends to indefinitely reinvest outside
of Sweden and upon which deferred income taxes have not been
provided is approximately SEK 40 billion (45) at year end. There are
different taxation rules depending on country, in some countries divi-
dends are not taxable and in some countries there are withholding
taxes. See note 36 how Volvo handles equity currency risk.
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