Anders Hedin Invest Årsredovisning 1
and the actual, acquired share of the reported va
lue of the subsidiary’s net assets is reported under Equity. Associated companies Associated companies are all companies in which the Group has a significant but not controlling interest, 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 valued at acquisition value and the carrying amount is increased or decreased accordingly with the purpose of taking into account the Group’s share of the associated company's profit or loss following the acquisition date. The Group’s reported value of holdings in associated companies includes goodwill identified in conjunction with the acquisition. The Group’s share 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 carrying value of the holdings. When the Group’s shares in an associated company's losses amount to or exceed its holdings in the associated company, including any unsecured claims, the Group does not report further losses unless the Group has accepted legal liability or informal obligations, or has otherwise made payments on behalf of the associated company. Translation of currencies The Parent Company’s functional currency is the Swedish krona, which also is the currency used in statements issued by the Parent Company and the Group. All foreign Group companies report in their functional currency, which is translated into Swedish kronor as at the year-end. Income items are adjusted to the average exchange rate. Translation differences that arise are expensed under Equity and reported under Other comprehensive income. Transactions in foreign currencies are translated into the functional currency using the exchange rates on the date of the transaction or the date the items are revalued. Exchange gains and losses that arise from payment of the transactions and translation of monetary assets and liabilities in foreign currencies as at the year-end are reported in the Income Statement. Exchange gains and losses that are attributable to loans and cash and cash equivalents are reported in the Income Statement as financial income or expense. All other 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 amortized, instead, an impairment test is conducted annually or more frequently if events or changes in conditions indicate a possible fall in value. Goodwill is recognized at cost less accumulated impairments. In the event of the sale of a unit, the goodwill carrying value is included in the resulting gain/loss. To conduct an impairment test, goodwill arising from business acquisitions is distributed to cash-generating units or groups of cash-generating units that can be expected to benefit from acquisition synergies. Each unit or group of units to which the goodwill is distributed represents the lowest level in the Group at which the relevant goodwill is monitored by internal management. Customer relations Customer relationships The acquisition value is calculated through cash flow valuation at acquisition date. Intangible rights Intangible rights consist primarily of investment in and development of IT systems, software and licenses. Maintenance costs for software are expensed as they arise. Software development costs and costs for improved operating systems are recognized as an asset if they are technically usable and there are sufficient resources to pursue further development and implement the systems thereafter. Acquisition costs for software acquired through business acquisitions are recognized at fair value at the time of the acquisition. Depreciation of intangible fixed assets with the purpose of allocating their acquisition value or revalued amount down to the estimated residual value over the estimated useful life, is made linearly as follows: Customer relationships Intellectual property rights Tangible fixed assets The land and buildings item mainly covers dealerships, service centers, storage facilities and offices. Land and buildings are reported at the revalued amount calculated by an independent external appraiser minus subsequent depreciation of buildings Valuations are conducted with sufficient regularity to ensure that the fair value of the revalued asset does not deviate materially from the carrying value. Accumulated depreciation at the time of revaluation is eliminated against the asset’s revalued acquisition value, after which the net amount comprises the asset's revalued amount. All properties that are valued pursuant to the revaluation method were sold in 2016. All other tangible fixed assets are reported at cost less depreciation. The acquisition value includes expenses that are directly attributable to the acquisition of the asset. Additional costs are included in the asset's carrying value, or are reported as an individual asset depending on which is appropriate, only when there is a likelihood of future financial benefits for the Group that are attributable to the asset, and the asset's acquisition value can be measured reliably. The carrying value of the replaced item is removed from the Balance Sheet. All other forms of repairs and maintenance are reported as costs in the Income Statement during the period in which they arise. Revaluation of the carrying value that arises as a result of revaluation of land and buildings is reported under Other comprehensive income and under Provisions in equity. Decreases that even out previous increases of the same asset are transferred from Provisions to Other comprehensive income. All other depreciation is expensed. The difference that arises between depreciation based in the asset's reported revalued amount (expensed depreciation) and depreciation based on the original acquisition value is transferred each year from Provisions to Retained earnings. Land is not depreciated. Depreciation of other assets in order to distribute their acquisition value or revalued amounts down to the estimated residual value during their estimated useful life is made on a straight-line basis as follows: Buildings Machinery and building equipment Costs incurred on another's property Equipment, installations and equipment 20-100 years 10-15 years 10-15 years 3-5 years The assets’ residual value and useful life are tested at the end of each accounting period and adjusted as necessary. An asset’s carrying value and useful life are depreciated immediately to its recoverable value if the asset’s carrying value exceeds its estimated recoverable value. Gains and losses that arise from sales are established by comparing sales revenue and the carrying value and are reported under Other operating income or Other operating expense in the Income Statement. 7 years 3-5 years 82 ANDERS HEDIN INVEST AB / ANNUAL REPORT / 2017