Volvo 2015 Annual Report Download - page 137

ACCOUNTING POLICY
Credit loss reserves
The assessment of credit loss reserves on customer-financing receiva-
bles is dependent on estimates including assumptions regarding past
dues, repossession rates and the recovery rate on the underlying collater-
als. The impairment requirement is primarily evaluated for each respective
asset. If, based on objective grounds, it cannot be determined that one or
more assets are subject to an impairment loss, the assets are grouped in
units based, for example, on similar credit risks to evaluate the impairment
loss requirement collectively. This is in order to cover credit losses incurred
but not yet individually identified in a larger population. Individually
impaired assets or assets impaired during previous periods are not
included when grouping assets for collective assessment. If the condi-
tions that gave rise to the recognition of an impairment loss later prove to
no longer be valid the impairment loss is reversed in the income statement
as long as the carrying amount does not exceed the amortized cost at the
time of the reversal.
As of December 31, 2015, the total credit loss reserves in the Cus-
tomer Finance segment amounted to 1.41% (1.33) of the total credit port-
folio in the segment. This reserve ratio, which is used as an important
measure for the Customer Finance segment, includes operating leases
and inventory, whereas this note specifies the balance sheet item Cus-
tomer Finance receivables for the Volvo Group and thereby excludes
operating leases and inventory as they are recognized elsewhere in the
balance sheet.
Read more in Note 4 for a description of the credit risk, interest and currency
risks and in Note 30 for further information regarding customer-financing
receivables.
Non-current customer-financing
receivables Dec 31, 2015 Dec 31, 2014
Installment credits 29,580 28,055
Financial leasing 21,325 21,820
Other receivables 57 1,455
B/S Non-current customer-
financing receivables 50,962 51,331
The effective interest rate for non-current customer-financing
receivables amounted to 4.65% (4.96) as of December 31, 2015.
15:1
SOURCES OF ESTIMATION UNCERTAINTY
!
Interest income on the customer- financing receivables is recognized
within Net sales. Changes to the credit loss reserves are recognized in
Other operating income and expense.
15:2
2019
8,929
2020
3,645
2018
15,173
2017
21,803
2021 or later
1,412
Non-current customer- financing
receivables maturities
SEK M
NOTE 15 CUSTOMER-FINANCING RECEIVABLES
15:3
Current customer-financing
receivables Dec 31, 2015 Dec 31, 2014
Installment credits 16,053 14,611
Financial leasing 12,948 14,617
Dealerfinancing 21,989 17,562
Other receivables 631 1,046
B/S Current customer financing
receivables 51,621 47,836
The effective interest rate for current customer-financing receiv-
ables amounted to 4.74% (5.31) as of December 31, 2015.
15:4
Credit risk in customer-financing
receivables Dec 31, 2015 Dec 31, 2014
Customer-financing receivables gross 104,096 100,616
Valuation allowance for doubtful
customer-financing receivables –1,514 –1,450
Whereof specific reserve –365 –364
Whereof other reserve –1,149 –1,086
Customer-financing receivables,
net of allowance 102,583 99,166
15:5
Change of valuation allowance for doubt-
ful customer-financing receivables 2015 2014
Opening balance 1,450 1,179
New valuation allowance charged to income 745 1,081
Reversal of valuation allowance charged to income –56 –161
Utilization of valuation allowance related to
actual losses –549 –752
Translation differences –76 103
Valuation allowance for doubtful customer-
financing receivables as of December 31 1,514 1,450
GROUP PERFORMANCE 2015 NOTES
135