Volvo 2012 Annual Report Download - page 105

IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements
and IFRS 12 Disclosures of Interests in Other Entities
Volvo Group will apply IFRS 10 Consolidated Financial Statement, IFRS 11
Joint Arrangements and IFRS 12 Disclosures of Interests in Other entities in
advance as from January 1, 2013. Comparative periods 2012 are restated.
IFRS 10 replaces the consolidation instructions in IAS 27 Consolidated and
Separate Financial Statements and SIC -12 Consolidation – Special Purpose
Entities and introduce one basis for consolidation, that is control. If the follow-
ing three criterias are fulfilled control is obtained (i) power of the investee (ii)
exposure, or rights, to variable returns from its involvement with the investee,
and (iii) the ability to use power over the investee to affect the amount of the
return. IFRS 10 is not considered to have any significant impact on the con-
solidation of other companies of which the Volvo Group has ownership or is
involved.
Refer to note 31 for further information related to IFRS 11 Joint Arrangements.
IFRS 12 Disclosure of Interests in Other Entities
Disclosure of Interests in Other Entities requires more detailed disclosures on
subsidiaries, joint arrangements, associates and any unconsolidated struc-
tured entities in which the company is involved. The disclosures in the annual
report will to some extent increase due to IFRS 12.
IAS 27 Separate Financial Statements (revised 2011)
IAS 27 has been amended for the issuance of IFRS 10, but retains the
current guidance for separate financial statements. The amendments in
IAS 27 are effective from January 1, 2013, but are not considered to have
any material effect on the Volvo Group.
IAS 28 Investments in Associates and Joint Ventures (revised 2011)
In connection with the issuance of IFRS 10 and IFRS 11, consequential
amendments have been made in IAS 28. The amendments in IAS 28 are
effective from January 1, 2013. According to IFRS 11, joint ventures are
recognized according to the equity method in IAS 28.
Read more in note 31 regarding recognition of Joint Ventures as from
January 1, 2013.
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single source of guidance for fair value measure-
ment and disclosures of fair value measurements. IFRS 13 does not
change the requirement regarding which items should be measured or
disclosed at fair value. The standard is to be applied prospectively and
comparative disclosures is not required. IFRS 13 requires us to take into
account factors that are specific to the transations and to the asset or lia-
bility. In many cases, the transaction price will equal the fair value.
The scope of IFRS 13 applies to all transactions and balances (financial
or non-financial) for which IFRSs require or permit fair value measurements,
except for share-based payment transactions and leasing transactions.
IFRS 13 is effective from January 1, 2013. The standard is not considered
to have a material effect on Volvo Group.
IFRS 9 Financial instruments*
IFRS 9 is published in three parts: Classification and Measurement, Impair-
ment and Hedge Accounting, which will replace the current IAS 39 with
application not earlier than January 1, 2015. Prior application is voluntary,
subject to EU approval. Volvo Group is currently conducting a review of how
the implementation of IFRS 9 will impact the Volvo Group. A joint position
will be taken in conjunction with the final version of all three components
of the project being published.
Other new standards and amendments are not considered to have a
material impact on the Volvo Group’s financial statements.
* This standard has not been adopted by the EU when this Annual Report was
published. The date listed for application may thus be subject to change due
to decisions made during the EU approval process.
Volvo Group’s most significant accounting policies are primarily described
together with the applicable note. Refer to Note 1, Accounting Policies for a
specification. The preparation of AB Volvo’s Consolidated Financial State-
ments requires the use of estimates, judgements and assumptions that affect
the recognized amounts of assets, liabilities and provisions at the date of the
financial statements and the recognized amounts of sales and expenses dur-
ing the periods presented. In preparing these financial statements, Volvo
Group’s management has made its best estimates and judgements of certain
amounts included in the financial statements, giving due consideration to
materiality. Since future results are an unknown quantity, actual results could
differ from these estimates due to the application of these assumptions. In
accordance with IAS 1, the company is required to provide additional disclo-
sure of accounting policies in which estimates, judgments and assumptions
are particularly sensitive and which, if actual results differ, may have a material
impact on the financial statements.
! The sources of uncertainty which has been identified by the Volvo
Group and which fulfill those criterias are presented in connection to the
items considered to be affected. The adjacent table shows where to find
those presentations.
Source of estimation uncertainty Note
Buy-back agreements and residual
value guarantees 7, Income
Deferred taxes 10, Income taxes
Impairment of goodwill and other intan-
gible assets 12, Intangible assets
Impairment of tangible assets 13, Tangible assets
Credit loss reserves 15,
16,
Customer-financing
receivables
Receivables
Inventory obsolescence 17, Inventories
Assumptions when calculating pensions
and other post-employment benefits 20, Provisions for post- employment benefits
Product warranty costs 21, Other provisions
Legal proceedings 21, Other provisions
Residual value risks 21, Other provisions
NOTE 2
KEY SOURCES OF ESTIMATION UNCERTAINTY
101