Volvo 2013 Annual Report Download - page 123

IFRS 13 Fair Value Measurement
IFRS 13 establishes a single source of guidance for fair value measurement
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 disclo-
sures is not required. IFRS 13 requires us to take into account factors that
are specifi c to the transaction and to the asset or liability. According to
IFRS13, an entity shall take into account the effect of its credit risk when
measuring fair value of fi nancial liabilities. In many cases, the transaction
price will equal the fair value. IFRS 13 applies to all transactions and bal-
ances (fi nancial or non-fi nancial) 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 has
not had any material effect on the Volvo Group.
Amendments to IAS 36 Impairment of Assets
The amendments to IAS 36 refer to a disclosure requirement about recov-
erable amount which was made as a consequence of IFRS 13. This disclo-
sure requirement has been removed and disclosures regarding recovera-
ble amount are restricted to when an impairment loss is recognized. The
effective date is January 1, 2014 but earlier application is permitted. Volvo
Group is applying the amendments as from January 1, 2013.
Other new or revised accounting standards or new interpretations
effective from January 1, 2013 have not had any material impact on the
Volvo Group’s fi nancial statements.
New accounting principles for 2014 and later
When preparing the consolidated fi nancial statements as of December 31,
2013, a number of standards and interpretations has been published, but
has not yet become effective.
IFRS 9 Financial instruments
IFRS 9 is published in three parts: Classifi cation and Measurement, Im -
pairment and Hedge Accounting, which will replace the current IAS 39. A
joint position regarding how the implementation of IFRS 9 will impact the
Volvo Group will be taken in conjunction with the fi nal version of all three
components of the project being published. The mandatory effective date
has been removed from the standard (previously January 2015), thus this
date is at present not known.
Other new or revised accounting standards are not considered to have a
material impact on the Volvo Group’s fi nancial statements.
The Volvo Group’s most signifi cant accounting policies are primarily
described together with the applicable note. Refer to Note 1, Accounting
Policies for a specifi cation. The preparation of AB Volvo’s Consolidated
Financial Statements requires the use of estimates and assumptions that
may affect the recognized amounts of assets and liabilities at the date of
the fi nancial statements. In addition, the recognized amounts of net sales
and expenses during the periods presented are affected. In preparing these
fi nancial statements, management has made its best judgments of cer-
tain amounts included in the fi nancial statements, materiality taken into
account. Actual results may differ from previously made estimates. In
accordance with IAS 1, the company is required to disclose the assump-
tions and other major sources of estimation uncertainties that, if actual
results differ, may have a material impact on the fi nancial statements.
!The sources of uncertainty which has been identifi ed by the Volvo
Group and which are considered to fulfi ll these criteria are pre-
sented in connection to the items considered to be affected. The table
below discloses where to fi nd these descriptions.
Source of estimation uncertainty Note
Buy-back agreements and residual value
guarantees 7, Income
Deferred taxes 10, Income taxes
Impairment of goodwill and other intangible
assets 12, Intangible assets
Impairment of tangible assets 13, Tangible assets
Credit loss reserves 15,
16,
Customer-fi nancing
receivables
Receivables
Inventory obsolescence 17, Inventories
Assumptions when calculating pensions and
other post-employment benefi ts
20, Provisions for post-
employment benefi ts
Product warranty costs 21, Other provisions
Legal proceedings 21, Other provisions
Residual value risks 21, Other provisions
NOTE 2 KEY SOURCES OF ESTIMATION UNCERTAINTY
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