Volvo 2013 Annual Report Download - page 144

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Volvo Group as the lessor
Leasing contracts are defi ned in two categories, operational and fi nancial
leases, depending on the contract’s fi nancial implications. Operational
leasing contracts are recognized as non-current assets in Assets under
operational leases. Income from operational leasing is recognized equally
distributed over the leasing period. Straight-line depreciation is applied to
these assets in accordance with the terms of the undertaking and the
deprecation amount is adjusted to correspond to the estimated realizable
value when the undertaking expires. Assessed impairments are charged
to the income statement. The product’s assessed realizable value at expir-
ation of the undertaking is reviewed continuously on an individual basis.
Financial leasing agreements are recognized as either non-current or
current receivables in the customer fi nance operations. Payments from
fi nancial leasing contracts are distributed between interest income and
amortization of the receivable in the customer fi nance operations.
Volvo Group as the lessee
Volvo evaluates leasing contracts in accordance with IAS 17, Leases. In
those cases in which risks and rewards that are related to ownership are
substantially held by the Volvo Group, so-called fi nancial leases, Volvo
Group recognizes the asset and related obligation in the balance sheet at
the lower of the leased asset’s fair value or the present value of minimum
lease payments. Future leasing fee commitments are recognized as obli-
gations. The lease asset is depreciated in accordance with the Volvo
Group’s policy for the respective non-current asset. The lease payments
when made are allocated between amortization and interest expenses. If
the leasing contract is considered to be a operational lease, lease pay-
ments are charged to profi t or loss over the lease contract period.
Volvo Group as the lessor
As of december 31, 2013, future rental income from non-cancellable
fi nancial and operational leases (minimum leasing fees) amounted to
53,061 (52,322). Future rental income is distributed as follows:
Finance
leases Operating
leases
2014 14,809 5,402
2015–2018 22,616 9,258
2019 or later 710 266
Total 38,135 14,926
Allowance for uncollectible future rental income (492)
Unearned rental income (2,795)
Present value of future rental income related to
non-cancellable leases 34,848
Read more about fi nancial leasing, see note 15.
Volvo Group as a lessee
As of december 31, 2013, future rental payments (minimum leasing fees)
related to non-cancellable leases amounted to 4,570 (3,817).
Future rental payments are distributed as follows:
Finance
leases Operating
leases
2014 264 1,132
2015–2018 428 1,832
2019 or later 142 772
Total 834 3,736
Rental expenses amounted to:
2013 2012
Finance leases:
Contingent rents (8) (10)
Operating leases:
Contingent rents (32) (36)
Rental payments (1,125) (1,113)
Sublease payments 7 7
Total (1,158) (1,152)
Carrying amount of assets subject to fi nancial leases:
Dec 31,
2013 Dec 31,
2012
Costs:  
Buildings 216 226
Land and land improvements 32 41
Machinery and equipment 591 627
Assets under operating lease1931 57
Total 1,770 951
Accumulated depreciation:
Buildings (65) (58)
Land and land improvements – (1)
Machinery and equipment (236) (288)
Assets under operating lease1(308) (14)
Total (609) (361)
Carrying amount in the balance sheet:
Buildings 151 168
Land and land improvements 32 40
Machinery and equipment 355 339
Assets under operating lease1623 43
Total 1,161 590
1 Refer to assets leased by the Volvo Group as fi nancial lease which are later
leased to customers as operating lease.
ACCOUNTING POLICIES
NOTE 14 LEASING
140
FINANCIAL INFORMATION 2013