ANNUAL REPORT Notes
Supplementary disclosures and notes
NOTE 1 ACCOUNTING AND VALUATION POLICIES
The most important accounting policies applied when preparing these consolidated financial statements are stated below . These policies have been applied consistently for all years presented , unless otherwise indicated .
The consolidated financial statements have been prepared in accordance with the Swedish Annual Accounts Act , recommendation RFR 1 Supplementary Accounting Rules for Groups from the Swedish Financial Reporting Board , and International Financial Reporting Standards ( IFRS ) as endorsed by the EU . The consolidated financial statements have been prepared in accordance with the cost method , except for remeasurement of available-for-sale financial assets , and financial assets and financial liabilities ( including derivative instruments ) measured at fair value through profit or loss .
Preparing financial statements in conformity with IFRS requires the use of certain important accounting estimates . It also requires management to make certain assessments in applying the Group ’ s accounting policies . The areas involving a high degree of assessment or complexity , or areas where assumptions and estimates are of significant importance for the consolidated financial statements , are addressed in Note 38 .
The new standards , amendments and interpretations of existing standards that took effect in 2015 have not had any impact on the Group ’ s financial position or financial statements .
The following standards and amendments of existing standards have been published , but have not yet been applied as of 2015 .
> IFRS 9 Financial Instruments ( effective as from 1 January 2018 , not endorsed by the EU ). IFRS 9 addresses the classification , measurement and recognition of financial assets and liabilities . The complete version of IFRS 9 was issued in July 2014 and replaces the parts of IAS 39 that pertain to classification and measurement of financial instruments . The standard retains , but simplifies , the measurement models and specifies three measurement categories for financial assets : amortised cost , fair value through other comprehensive income , and fair value through profit or loss . Classification depends on the company ’ s business model and the characteristics of the instrument . Investments in equity instruments are to be measured at fair value through profit or loss , but there is the option to recognise the instrument ’ s changes in value in other comprehensive income on initial recognition . No reclassification to profit or loss may then take place when the instrument is divested . IFRS 9 also introduces a new model for the calculation of a credit loss reserve based on expected credit losses .
The classification and measurement of financial liabilities is not changed , except for liabilities measured at fair value through profit or loss based on the fair value option . Changes in value attributable to changes in own credit risk are to be recognised in other comprehensive income .
IFRS 9 reduces the requirements for the application of hedge accounting by replacing the 80-125 criterion with a requirement for the economic relationship between the hedge instrument and the hedged item , and for the hedge ratio to be the same as that actually used in risk management . Hedge disclosures have also been changed slightly compared with those provided under IAS 39 .
The Group has not yet evaluated the effects of introduction of the standard .
> IFRS 15 Revenue from Contracts with Customers ( effective from 1 January 2018 , not endorsed by the EU ). IFRS 15 is the new standard for revenue recognition and replaces IAS 18 Revenue and IAS 11 Construction Contracts and all associated interpretations
( IFRIC and SIC ). Revenue is to be recognised when control of the goods or service is passed to the customer ; this replaces the previous policy of recognising revenue when the risks and benefits have been passed to the customer . A customer has control of a good or service when it can direct the use of the asset and obtain benefits from it . The core principle of IFRS 15 is that companies recognise revenue that best depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services . A five-step model framework provides guidance for recognition : Step 1 : Identify the contract with the customer Step 2 : Identify the performance obligations in the contract Step 3 : Determine the transaction price Step 4 : Allocate the transaction price to the performance obligations in the contract Step 5 : Recognise revenue when the entity satisfies a performance obligation IFRS 15 contains significantly expanded disclosure requirements . The disclosure objective is to disclose sufficient information to enable users of financial statements to understand the nature , amount , timing and uncertainty of revenue and cash flows arising from contracts with customers .
The Group has not yet evaluated the effects of introduction of the standard .
> IFRS 16 Leases ( effective as from 1 January 2019 , not endorsed by the EU ). IFRS 16 was published in January 2016 and replaces IAS 17 Leases and related interpretations . The greatest effect for lessees is that there will no longer be any difference between operating and finance leases . All lease contracts , including rents of premises , are to be recognised on the balance sheet with the exception of short-term leases and leases of low value . Recognition is based on the view that the lessee has a right to use an asset during a specific period of time and at the same time has an obligation to pay for this right . A lessee shall therefore recognise a leasing asset and a financial liability on the balance sheet . In the income statement , the linear operating lease cost is replaced by a cost for depreciating the leased assets and an interest cost for the financial liability . At present , lessees do not recognise operating leases on the balance sheet .
The Group has not yet evaluated the effects of introduction of the standard .
Other published new and amended standards and interpretations of existing standards that have not yet come into effect in 2015 are not expected to have any material impact on the consolidated financial statements .
CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements cover the Parent Company and the companies over which the Parent Company , directly or indirectly , has control . The Parent Company has control of an entity when it is exposed to , or has rights to , variable returns from its involvement with the entity and has the ability to affect those returns through its influence over the entity .
The consolidated financial statements have been prepared in accordance with the acquisition method , which entails that the shareholders ’ equity of subsidiaries on acquisition , determined as the difference between the fair value of the assets and the liabilities , is eliminated in its entirety . Only the part of the subsidiaries ’ shareholders ’ equity that accrued after the acquisition is included in consolidated shareholders ’ equity .
The purchase consideration transferred for the acquisition of a subsidiary consists of the fair value of the assets transferred to the former owners of the acquired company , the liabilities incurred
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