Anders Hedin Invest årsredovisning ENG 1
Associates Associates are all companies in which
the Group has significant but not controlling interests, which generally applies to shareholdings of 20 - 50% of the votes. Holdings in associated companies are reported in accordance with the equity method. When applying the equity method, the investment is initially valuated according to the acquisition value, and the reported value is thereafter increased or reduced to take into account the Group's share of the associate company's gains or losses after the acquisition. The Group's reported value for holdings in associated companies includes goodwill that is identified during the acquisition. The Group's shar e of profit that has arisen after the acquisition is reported in the Income Statement, and its share of changes in Other Comprehensive Income after the acquisition is reported in Other Comprehensive Income, including corresponding adjustments to the reported value of the holdings. When the Group's shares in an associate company's losses amounts to or exceeds its holdings in the associate company, including unsecured claims, the Group does not report further losses unless the Group has accepted legal liability or informal obligations or otherwise made payments on behalf of the associate company. Translation of currencies The parent company's functional currency is Swedish Krona which also is the currency used in statements by the Parent Company and the Group. All foreign Group companies report in their functional currency which is translated according to the balance sheet date. Income items are adjusted to the average exchange rate. Translation differences that arise are expensed under equity and reported under Comprehensive Income. Transactions in foreign currencies are translated to the functional currency according to exchange rates on the date of the transaction or the date the items are adjusted. Foreign exchange gains and losses that arise from payment of such transactions and translation of monetary assets and liabilities in foreign currencies at the balance sheet date are reported in the Income Statement. Foreign exchange gains and losses that are attributable to loans and liquid assets are reported in the Income Statement as financial income or costs. All other foreign exchange gains and losses are reported under Operating Profit. Intangible fixed assets Goodwill Goodwill that arises as a result of business acquisitions is included in intangible assets. Goodwill is not depreciated; instead, an impairment test is conducted annually or more often if events or changes of conditions indicate a possible depreciation in value. Goodwill is recognized at acquisition value less impairment losses. In the event of the sale of a unit, the goodwill carrying amount is included in the resulting gain/loss. In order to conduct an impairment test, goodwill arising from business acquisitions is distributed to cash generating units that can be expected to benefit from acquisition synergies. Each unit or group of units that the goodwill is distributed to represent the lowest level in the Group at which the relevant goodwill is supervised by internal management. Intangible rights Intangible rights consist primarily of investments and development of IT systems, programs and licenses. Maintenance costs for software are booked as they arise. Software development costs and expenses for improved operational systems are reported as an asset if they are technically usable and there are sufficient resources to pursue further development and implement thereafter. Acquisition costs for software acquired through business acquisitions are reported at fair value at the time of the acquisition. Tangible fixed assets Land and buildings refers primarily to dealerships, repair shops, storage facilities and offices. Land and buildings is reported at its revalued amount calculated by an external and unaffiliated appraiser less depreciation of property. Valuations are conducted with sufficient regularity to ensure that fair value of the revalued asset does not deviate significantly from the carrying amount. Accumulated depreciation at the time of the revaluation is eliminated against the asset's revaluated acquisition value, after which the net amount comprises the asset's revaluated amount. All other tangible fixed assets are reported at acquisition value less depreciation. Costs directly attributable to acquisition are included in the acquisition value. Additional costs are included in the asset's carrying amount, or noted as an individual asset as is appropriate, only when there is a likelihood of future financial benefits attributable to the asset benefiting the Group, and the asset's acquisition value can be measured with a degree of reliability. Carrying amount for the replaced item is removed from the balance sheet. All other forms of reparations and maintenance are reported as costs in the Income Statement as they arise. Revaluation of the carrying amount that arises as a result of revaluation of land and buildings is noted under Other Comprehensive Income and Reserves in Equity. Depreciation that levels out previous revaluation of the same asset is transferred From Reserve in Equity to Other Comprehensive Income. All other depreciations are booked. The difference that arises from the depreciation based in the asset's reported revaluated amount (booked depreciation) and depreciation based on original acquisition value is annually transferred from Reserve to Retained Earnings. Land is not depreciated. Depreciation of other assets in order to distribute their acquisition value or revaluated amounts down to the estimated residual interest during the projected period of utility are conducted linearly in accordance with the following: Buildings Machinery Equipment in buildings Equipment and tools 25-100 years 10-15 years 15-80 years 3-5 years The assets' residual interest and period of utility is tested at the close of each accounting period and adjusted as needed. An asset's carrying amount and period of use is immediately depreciated to its recoverable amount if the asset's carrying amount exceeds its estimated recoverable amount. Gains and losses that arise from sales are established by comparing sales revenue and the carrying amount and are noted under Other Operating Income in the Income Statement. Impairment of non-financial assets Intangible assets that have an undefined period of utility or intangible assets that are not ready for use are not written off; instead, they are tested annually depending on impairment requirements. Assets that are amortised are assessed in the event that changes in conditions indicate that the carrying amount may not be recoverable. Impairment is valuated in accordance with the amount that the carrying amount exceeds its recoverable amount. The recoverable amount constitutes the higher amount of the asset's fair value less sales expenses and its value of use. In impairment tests the assets are grouped at the lowest level where there are generally independent cash flows (cash generating units). Previously impairment loss in assets (other than goodwill) are tested at each balance sheet date to see if reversal is required. Financial instruments Classification The Group classifies financial assets in the following categories: Financial assets revaluated at fair value in the Income Statement, loans 70 ANDERS HEDIN INVEST AB ANNUAL REPORT / 2015