Volvo 2015 Annual Report Download - page 136

Volvo Group as the lessor
Leasing contracts are defined in two categories, operating and finance
leases, depending on the contract’s financial implications. Operating
lease contracts are recognized as non-current assets in Assets under
operating leases as Operating leases, Rental fleet and Sales with residual
value commitments. Income from operating lease 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
depreciation 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.
Finance lease agreements are recognized as either non-current or cur-
rent receivables in the Customer Finance Operations. Payments from
finance lease contracts are distributed between interest income and
amortization of the receivable in the Customer Finance Operations.
Volvo Group as the lessee
As for lessors, leases are divided into operating and finance lease.
Finance lease are those cases when risks and rewards related to owner-
ship are substantially held by the Volvo Group. 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
lease fee commitments are recognized as obligations. The lease asset is
depreciated in accordance with the Volvo Group’s policy for the respective
non-current asset. The lease payments made are allocated between
amortization and interest expenses. If the lease contract is considered to
be an operating lease, lease payments are charged to profit or loss over
the lease contract period.
Volvo Group as the lessor
As of December 31, 2015, future rental income from non-cancellable
finance and operating leases (minimum lease fees excluding sales with
residual value commitments) amounted to SEK 56,226 M (58,392).
Future rental income Finance
leases Operating leases
2016 14,321 7,160
2017–2020 21,920 11,385
2021 or later 1,137 303
Total 37,378 18,848
Allowance for uncollectible future rental income –551 
Unearned rental income –2,554 
Present value of future rental income related to
non-cancellable leases 34,273 
Read more about finance lease, in Note 15 Customer-financing receivables.
Volvo Group as a lessee
As of December 31, 2015, future rental payments (minimum leasing fees)
related to non-cancellable leases amounted to SEK 5,140 M (5,524).
Future rental payments Finance
leases Operating leases
2016 81 1,277
2017–2020 245 2,205
2021 or later 298 1,035
Total 624 4,516
Rental expenses 2015 2014
Finance leases:  
Contingent rents –5 –6
Operating leases: 
Contingent rents –34 –31
Rental payments –1,447 –1,563
Sublease payments 5 8
Total –1,481 –1,592
Carrying amount of assets subject
to financial leases Dec 31, 2015 Dec 31, 2014
Acquisition value 
Buildings 413 419
Land 78 80
Machinery 689 667
Assets under operating lease and rental fleet1545 835
Total 1,725 2,001
Accumulated depreciation:
Buildings –96 –77
Land –3 –1
Machinery –353 –292
Assets under operating lease and rental fleet1–213 –329
Total –666 –700
Carrying amount in the balance sheet:
Buildings 317 342
Land 75 79
Machinery 336 375
Assets under operating lease and rental fleet1332 506
Total 1,059 1,301
1 Refer to assets leased by the Volvo Group as finance lease which are later
leased to customers as operating lease.
ACCOUNTING POLICY
NOTE 14 LEASING
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GROUP PERFORMANCE 2015 NOTES