Volvo 2015 Annual Report Download - page 116

ACCOUNTING POLICY
Recognition of business combinations
All business combinations are recognized in accordance with the pur-
chase method. Volvo Group measures acquired identifiable assets, tangi-
ble and intangible, and liabilities at fair value. Any surplus amount from the
purchase price, possible minority interests and fair value of previously
held equity interests at the acquisition date compared to the Volvo Group’s
share of acquired net assets is recognized as goodwill. Any deficit 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 financial statements up to
and including the date of the divestment.
Non-current assets held for sale and discontinued operations
In a global group like the Volvo Group, processes are continuously ongoing
regarding the sale of assets or groups of assets at minor values. When the
criteria for being classified as a non-current asset held for sale are fulfilled
and the asset or group of assets are of significant value, the asset or group
of assets, both current and non-current, and the related liabilities are rec-
ognized on a separate line in the balance sheet. The asset or group of
assets are measured at the lower of it’s carrying amount and fair value
after deductions for selling expenses. The balance sheet items and the
potential income effect resulting from the revaluation to fair value less sell-
ing expenses are normally recognized in the segment Corporate functions,
Group functions and Other, until the sale is completed and the result is
distributed to the relevant segments.
AB Volvo’s holding of shares in subsidiaries as of December 31, 2015
is disclosed in note 13 for the Parent Company. Significant acquisitions,
formations and divestments within the Group are listed below.
Business combinations during the period
The Volvo Group has not made any acquisitions of subsidiaries during
2015.
Comparative figures for 2014 include the acquisition of the hauler man-
ufacturing business from Terex Inc. On May 30 2014, Volvo Group
acquired 100% of Terex Equipment LTD. The purchase price adjustment
did not lead to any significant impact on the Volvo Group’s financial state-
ments in 2015.
The impact on the Volvo Group’s balance sheet and cash-flow state-
ment in connection with the acquisitions of subsidiaries and other busi-
ness units are specified in the following table:
Acquisitions 2015 2014
Intangible assets – 280
Property, plant and equipment – 124
Assets under operating lease – –
Shares and participations – 233
Inventories – 385
Current receivables – 436
Cash and cash equivalents – 67
Other assets – 7
Provisions – –84
Loans – –55
Current liabilities – –368
Acquired net assets – 1,025
Goodwill – 75
Total –1,100
Cash and cash equivalents paid – –1,170
Cash and cash equivalents according
to acquisition analysis – 67
Effect on Volvo Group cash and
cash equivalents ––1,103
Cash to be paid –68
Effect on Volvo Group net financial
position ––1,158
NOTE 3 ACQUISITIONS AND DIVESTMENTS OF SHARES IN SUBSIDIARIES
GROUP PERFORMANCE 2015 NOTES
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