Volvo 2014 Annual Report Download - page 146

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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 expi-
ration 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 Finance Operations. Payments from
fi nancial leasing contracts are distributed between interest income and
amortization of the receivable in the Customer Finance 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 an 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, 2014, future rental income from non-cancellable
fi nancial and operational leases (minimum leasing fees excluding sales
with residual values) amounted to SEK 58,392 M (53,061).
Future rental income Finance
leases Operating
leases
2015 16,605 7,021
2016–2019 22,939 10,867
2020 or later 736 224
Total 40,280 18 ,112
Allowance for uncollectible future rental income (485)
Unearned rental income (3,359)
Present value of future rental income related to
non-cancellable leases 36,437
Read more about fi nancial leasing, in note 15.
Volvo Group as a lessee
As of December 31, 2014, future rental payments (minimum leasing fees)
related to non-cancellable leases amounted to SEK 5,524 M (4,570).
Future rental payments Finance
leases Operating
leases
2015 168 1,589
2016–2019 230 2,181
2020 or later 342 1,014
Total 740 4,784
Rental expenses 2014 2013
Finance leases:
Contingent rents (6) (8)
Operating leases:
Contingent rents (31) (32)
Rental payments (1,563) (1,125)
Sublease payments 8 7
Total (1,592) (1,158)
Carrying amount of assets subject
to fi nancial leases Dec 31,
2014 Dec 31,
2013
Costs: 
Buildings 419 216
Land and land improvements 80 32
Machinery and equipment 667 591
Assets under operating lease1835 931
Total 2,001 1,770
Accumulated depreciation:
Buildings (77) (65)
Land and land improvements (1) –
Machinery and equipment (292) (236)
Assets under operating lease1(329) (308)
Total (700) (609)
Carrying amount in the balance sheet:
Buildings 342 151
Land and land improvements 79 32
Machinery and equipment 375 355
Assets under operating lease1506 623
Total 1, 301 1,161
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
FINANCIAL INFORMATION 2014
142