Saab 2010 Annual Report Download - page 76

NOTE 1
ACCOUNTING PRINCIPLES
Operations
Saab AB is a Swedish limited company with its registered address in
Linköping. e company’s shares are listed on the   Stockholm’s
large cap list. e operations of Saab AB with its subsidiaries, joint ventures
and associated companies (jointly referred to as Saab or the Group) have
been divided since  January  into ve business areas: Aeronautics,
Dynamics, Electronic Defence Systems, Security and Defence Solutions, and
Support and Services. e operations in each business area are described in
Note . Segment information for  has been restated for comparability in
accordance with the new distribution.
Saab has a strong position in Sweden and the large part of its sales are
generated in Europe, in addition to which Saab has a local presence in South
Africa, Australia, the U.S. and other selected countries.
On  February , the Board of Directors and the President approved
this annual report and consolidated accounts for publication, and they will be
presented to the Annual General Meeting on  April  for adoption.
Conformity to standards and laws
e consolidated accounts have been prepared in accordance with the Interna-
tional Financial Reporting Standards () issued by the International Account-
ing Standards Board () and the interpretations of the International Financial
Reporting Interpretations Committee () as approved by the . e consol-
idated accounts have also been prepared in accordance with the Swedish Finan-
cial Reporting Board’s recommendation   (December ) Supplementary
Accounting Rules for Groups, which contains certain additional disclosure
requirements for Swedish consolidated accounts prepared in accordance with
.
e annual report for Saab AB has been prepared according to the
Annual Accounts Act, the Swedish Financial Reporting Board’s recommen-
dation   (December ) Reporting by Legal Entities and the pro-
nouncements of the Swedish Financial Reporting Board. Dierences
between the accounting principles applied by Saab AB and the Group are the
result of limitations on opportunities to apply  by the Parent Company
owing to the Annual Accounts Act, the Act on Safeguarding Pension Com-
mitments and in certain cases current tax rules. Signicant dierences are
described below under “Signicant dierences between the Group’s and the
Parent Company’s accounting principles.”
Assumptions in the preparation of the financial reports
e Parent Company’s functional currency is Swedish kronor (), which is
also the reporting currency for the Parent Company and for the Group. e
nancial reports are presented in . All amounts, unless indicated other-
wise, are rounded o to the nearest million.
Assets and liabilities are carried at historical cost, with the exception of
certain nancial assets and liabilities, investment properties and biological
assets, which are carried at fair value or amortised cost. Derivatives are car-
ried at fair value.
Non-current assets and disposal groups held for sale are carried at the
lower of their carrying amount and fair value less selling expenses at the time
they were classied as held for sale.
e preparation of the nancial reports in accordance with  requires
the Board of Directors and Management to make estimates and assumptions
that aect the application of the accounting principles and the carrying
amounts of assets, liabilities, revenue and expenses. Estimates and assump-
tions are based on historical experience and knowledge of the industry that
Saab operates in, and under current circumstances seem reasonable. e
result of these estimates and assumptions is then used to determine the carry-
ing amounts of assets and liabilities that otherwise are not clearly indicated
by other sources. Actual outcomes may deviate from these estimates and
assumptions.
Estimates and assumptions are reviewed regularly, and the eect of
changed estimates is recognised in prot or loss.
Estimates made by the Board of Directors and Management in applying
the accounting principles in compliance with  that may have a signicant
impact on the nancial reports as well as estimates that may necessitate
signicant adjustments in nancial reports in subsequent years are described
in more detail in Note .
e accounting principles described below for the Group have been
applied consistently for all periods presented in the Group’s nancial reports,
unless otherwise indicated below.
Application of new and revised accounting rules
e International Accounting Standards Board () and the International
Financial Reporting Interpretations Committee (IFRIC) have issued and the 
has adopted the following new and revised standards, which apply as of the
nancial year :
• Revised IFRS  First-time Adoption of IFRS is applied
• Amendment to IFRS  Share-based Payment (Cash-settled share-based
payment transactions that can be settled by other group companies)
• Revised IFRS  Business Combinations
• Amendment to IAS  Consolidated and Separate Financial State-
ments
• Amendments to IAS  Financial Instruments: Recognition and
Measurement (Clarication what can be considered hedged items)
• Improvements to IFRS 
• IFRIC  Agreements for the Construction of Real Estate
• IFRIC  Distributions of Non-cash Assets to Owners
• IFRIC  Transfers of Assets from Customers.
Of these, only the revised IFRS  Business Combinations and the
amended IAS  Consolidated and Separate Financial Statements are
expected to have a material eect on the consolidated nancial statements,
though not in .
IFRS  and IAS  apply to business combinations and divestments. e new
rules can be summarised as follows:
• Transaction costs are not included in cost and instead are treated as
overhead and recognised in prot or loss when they arise.
• Contingent consideration is measured at fair value on the acquisition
date and eects of revaluations are recognised in prot or loss.
• An acquisition analysis according to IFRS  is done only when deci-
sive inuence is obtained. In the case of step acquisitions, previously
owned interests are revalued at fair value once decisive inuence is
obtained. Any gain or loss on the previously owned interest is recog-
nised in prot or loss.
• Transactions that result in a change in ownership interest aer deci-
sive inuence has been obtained are recognised as transactions aect-
ing the owners’ equity.
• Non-controlling interests are recognised on the acquisition date ei-
ther at fair value or their proportionate share of the fair value of the
acquired operations’ identied assets and liabilities.
• e denition of operations has changed.
e amendments are applied prospectively as of  January .
Other new and amended standards and interpretations have not had an
eect on the Group’s  nancial reports.
New and amended standards and interpretations that have not yet
entered into force
e International Accounting Standards Board () has issued the follow-
ing new and amended standards that have not yet entered into force and the
International Financial Reporting Interpretations Committee () has
published the following new and amended interpretations that have not yet
entered into force:
FINANCIAL INFORMATION > NOTES
SAAB ANNUAL REPORT 2010 73