The Volvo Group applies International Financial Reporting Standards (IFRS) as endorsed by the EU. The accounting principles adopted are consistent with those described in the 2012 Annual Report for the Volvo Group. This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Annual Accounts Act.
The parent company applies the Annual Accounts Act and RFR 2 Reporting for legal entities. Application of RFR 2 entails that in interim reporting for legal entities, the parent company is to apply all IFRSs and interpretations approved by the EU as far as possible within the framework of the Swedish Annual Accounts Act, the Pension Obligations Vesting Act, and taking into account the connection between accounting and taxation.
New accounting principles in 2013
As from January 1, 2013 Volvo applies the following new accounting standards:
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosures of Interest in Other Entities, IFRS 13 Fair value measurement, revised IAS 27 Separate Financial Statements, revised IAS 28 Investments in Associates and Joint Ventures, revised IAS 1 Presentation of financial statements, amendment to IFRS 7 Financial instrument: Disclosures and the amendment to IAS 19 Employee Benefits.
The major accounting changes are:
- The joint ventures of the Volvo Group are accounted for using the equity method, as the formerly applied proportional method is no longer a valid accounting choice according to IFRS 11. The equity share in the joint venture VE Commercial Vehicles (VECV) is recognized at 45,6%. The 8,4% share in the other joint partner, the listed company Eicher Motors Ltd., is accounted for as other shares and participations and is revalued over other comprehensive income.
- The Volvo Group ceases to account for defined pension liabilities using the so called corridor method in accordance with IAS 19. Changes in the net defined pension liability or asset are instead recognized in profit or loss and other comprehensive income when they occur.
- The Volvo Group changes the presentation of the hedging effects on firm flows to be included in the finance net. They were previously reported within operating income.The new accounting principles are applied retrospectively and hence the income statement and balance sheet for 2012 have been adjusted accordingly. Note 31 in the Volvo Group Annual Report 2012 describes the content of the new accounting principles, that are material for the Volvo Group, in more detail and presents the effect of the new principles on the quarterly consolidated income statement and balance sheet, net financial position and segment reporting for the comparative year 2012. The Annual Report is available at www.volvogroup.com