Volvo 2013 Annual Report Download - page 124

ACCOUNTING POLICY
Recognition of business combinations
The Volvo Group applies IFRS 3, Business Combinations, for acquisitions.
All business combinations are recognized for in accordance with the pur-
chase method. Volvo Group measures acquired identifi able assets, tangi-
ble and intangible, and liabilities at fair value. Any surplus amount from the
purchase price, possible non-controlling interests and fair value of previ-
ously held equity interests at the acquisition date compared to the Volvo
Group’s share of acquired net assets is recognized as goodwill. Any defi cit
amount, known as negative goodwill, is recognized in the income statement.
In step acquisitions, a business combination occurs only on the date
control is achieved, which is also the time when goodwill is calculated.
Transactions with the minority are recognized as equity as long as control
of the subsidiary is retained. For each business combination, the Volvo Group
decides whether the minority interest shall be valued at fair value or at the
minority interest’s proportionate share of the net assets of the acquiree. All
acquisition-related costs are expensed. Companies acquired during the
year are consolidated as of the date of acquisition. Companies that have
been divested are included in the consolidated fi nancial statements up to
and including the date of the divestment.
Non-current assets held for sale and discontinued operations
The Volvo Group applies IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations. The standard also includes the treatment of cur-
rent assets. In a global group like the Volvo Group, processes are continu-
ously ongoing regarding the sale of assets or groups of assets at minor
values. When the criteria for being classifi ed as a non-current asset held
for sale are fulfi lled and the asset or group of assets are of signifi cant
value, the asset or group of assets and the related liabilities are recognized
on a separate line in the balance sheet. The asset or group of assets are
tested for impairment and, if impaired, measured at fair value after deduc-
tions for selling expenses. The balance sheet items and the income effect
resulting from the revaluation to fair value less selling expenses are nor-
mally recognized in the segment Group headquarter functions and other,
until the sale is completed and the result distributed to each segment.
AB Volvo’s holding of shares in subsidiaries as of December 31, 2013 is
disclosed in note 13 for the Parent Company. Signifi cant acquisitions,
formations and divestments within the Group are listed below.
Business combinations during the period
During 2013, the Volvo Group acquired net assets amounting to 23 (702).
The acquisition do not have any signifi cant impact on the Volvo Group’s
earnings and fi nancial position. For acquisitions made in 2012, the fair-
value adjustments to the acquisition balance sheets have not had any sig-
nifi cant impact on the Volvo Group. The impact on the Volvo Group’s bal-
ance sheet and cash-fl ow statement in connection with the acquisition of
subsidiaries and other business units are specifi ed in the following table.
Acquisitions 2013 2012
Intangible assets – 190
Property, plant and equipment 14 176
Assets under operating lease 8 475
Inventories 96 503
Current receivables 2 257
Cash and cash equivalents – 21
Other assets – 14
Minority interests – –
Provisions (1) (87)
Loans (1) (225)
Current liabilities (95) (622)
Acquired net assets 23 702
Goodwill 48 888
Negative goodwill – (42)
Total 71 1,548
Cash and cash equivalents paid (71) (1,548)
Cash and cash equivalents according to acquisition
analysis – 21
Effect on Group cash
and cash equivalents (71) (1,527)
Effect on Group net
fi nancial position (138) (1,714)
NOTE 3 ACQUISITIONS AND DIVESTMENTS OF SHARES IN SUBSIDIARIES
120
FINANCIAL INFORMATION 2013
120