Volvo 2011 Annual Report Download - page 103

Specification of deferred tax assets
and tax liabilities 2011 2010
Deferred tax assets:  
Unused tax-loss carryforwards 6,907 7,327
Other unused tax credits 141 121
Intercompany profitin inventories 780 711
Allowance for inventory obsolescence 368 439
Valuation allowance for doubtful
receivables 482 587
Provisions for warranties 2,067 1,722
Provisions for residual value risks 288 306
Provisions for post-employment
benefits 1,188 2,068
Provisions for restructuring measures 42 61
Adjustment to fair valueduring corpo-
rate acquisitions 0 12
Market value of derivative instruments 28 45
Land 2,204 2,455
Other deductible temporary differences 4,320 4,594
Deferred tax assets before
deduction for valuation allowance 18,815 20,448
Valuation allowance (263) (339)
Deferred tax assets after deduction
for valuation allowance 18,552 20,109
Netting of deferred tax assets/liabilities (5,714) (7,799)
Deferred tax assets, net 12,838 12,310
Deferred tax liabilities:  
Accelerated depreciation on property,
plant and equipment 3,811 4,094
Accelerated depreciation on leasing
assets 1,959 2,111
LIFO valuation of inventories 270 224
Capitalized product and software
development 3,721 3,597
Adjustment to fair value at company
acquisitions 31 0
Untaxed reserves 92 97
Market value of derivative instruments 1 20
Other taxable temporary differences 1,464 2,178
Deferred tax liabilities 11,349 12,321
Netting of deferred tax assets/liabilities (5,714) (7,799)
Deferred tax liabilities, net 5,636 4,522
Deferred tax assets/liabilities, net17,203 7,788
1 The deferred tax assets and liabilities above are partially recognized in the
balance sheet on a net basis after taking into account offsetting possibilities.
Deferred tax assets and liabilities have been measured at the tax rates that are
expected to apply during the period when the asset is realized or the liability is
settled, according to the tax rates and tax regulations that have been resolved or
announced at the balance-sheet date.
Tax-loss carryforwards are largely attributable to countries with long or
indefinite periods of utilization, mainly Sweden, Japan and France. Of the
total deferred tax assets of 6,907 (7,327) attributable to tax-loss carry-
forwards, 2,914 (3,665) pertains to Sweden, with an indefinite period of
utilization.
The cumulative amount of undistributed earnings in foreign subsidiaries,
which Volvo currently intends to indefinitely reinvest outside of Sweden
and upon which deferred income taxes have not been provided is approx-
imately SEK 62 billion (47) at year end. The main part of the undistributed
earnings is pertaining to countries where the dividends are not taxable.
Refer to Note 4 for information on how Volvo handles equity currency risk.
Minority interests, are interest attributable to non-controlling sharehold-
ers. Minority interests are presented in the equity, separately from the
equity of the owners of the parent (IAS 27). At business combinations
minority interests should be valued either at fair value or at the minority’s
proportionate share of the acquiree’s net assets (IFRS 3). Minority inter-
ests are assigned the minority shareholder’s portion of the equity of the
subsidiary. Changes in a parent’s ownership interest in a subsidiary that
do not result in a loss of control are accounted for as equity transactions.
(IAS 27)
Minority interests in income (loss) for the period and in shareholders’
equity consisted mainly of the minority interests in Shandong Lingong
Construction Machinery Co, Ltd (30%).
ACCOUNTING POLICY
MINORITY INTERESTS
11
NOTE
99