Note Summary of significant accounting policies
be recognized at fair value or according to the proportional
share of the acquired company’s net assets. The excess of
the purchase price, any non-controlling interests and the fair
value of previous shareholdings at the acquisition date over
the fair value of the Group’s interest in identifiable net assets
is recognized as goodwill. If this amount is less than the fair
value for the acquired subsidiary’s assets, the difference
is recognized directly in the statement of comprehensive
income.
All intra-group transactions, balances and unrealized
gains on transactions are eliminated, unless the transaction
provides evidence of impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by
the Group.
Transactions with holders of non-controlling interests
The Group handles transactions with holders of non-
controlling interests in the same ways as transactions with
the Group’s shareholders. In the event of acquisitions from
holders of non-controlling interests, the company recognizes
the difference between the purchase price paid and the actual
acquired portion of the carrying amount of the subsidiary’s net
assets in equity. Gains and losses on disposals to holders of
non-controlling interests are also recognized in equity.
When the Group no longer holds a controlling or significant
influence, each shareholding is remeasured at fair value
and the change in the carrying amount is recognized in the
income statement. Fair value is used as the primary carrying
amount and forms the basis for ongoing recognition of the
remaining ownership interest as an associate company, joint
venture or financial asset. All amounts relating to divested
units previously recognized under “Other comprehensive
income” are recognized as though the Group had directly
disposed of the respective assets or liabilities. This can result
in amounts previously recognized in “Other comprehensive
income” being reclassified as earnings.
If the equity interest in an associate is reduced but significant
influence still remains, where relevant only a proportional
share of the amounts previously recognized in “Other comprehensive
income” is recognized as earnings.
Associated companies
Associates are those companies where the Group has
significant influence, but not a controlling influence over
operational and financial management, usually through an
ownership interest of between 20 percent and 50 percent
of the voting rights. As of the date at which the significant
influence is acquired, investments in associated companies
are recognized in the consolidated financial statements using
the equity method. The equity method means that the value
of the shares in the associated companies recognized for the
Group corresponds to the Group’s interest in the equity of
the associates plus Group-related goodwill and any residual
values of Group-related surplus or shortfall in value. The
consolidated income statement reports the Group’s share of
profit of associated companies, adjusted for any amortization,
impairment or dissolution of acquired surplus or shortfall
values, as other financial revenue. Dividends received from
associated companies reduce the carrying amount of the
investment.
The equity method is used until significant influence
ceases.
Foreign currency translation of foreign subsidiaries’
financial statements
Functional and presentation currency
Items included in the financial statements of each of the
Group’s subsidiaries are measured using the currency of the
primary economic environment in which they operate (functional
currency). The consolidated financial statements are
presented in Swedish krona which is the Parent’s functional
and presentation currency.
Transactions and balance sheet items
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing on the
dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated
in foreign currencies at the closing rate are recognized as of
the end of the reporting period in the income statement.
Group companies
The results and financial position of foreign subsidiaries (none
of which has the currency of a hyperinflationary economy)
that have a functional currency other than the presentation
currency are translated into the Group’s presentation currency
as follows:
Assets and liabilities are translated at the closing day rate.
Income and expenses are translated at average exchange
rates.
All exchange differences are charged directly to other
comprehensive income and are recognized as a separate
part of equity. When a foreign subsidiary is sold, any
exchange differences are recognized in profit or loss as
part of the gain or loss on the sale.
Goodwill and fair value adjustments arising in the acquisition
of foreign operations are treated as assets and liabilities of the
entity and translated at the closing day rate.
Exchange rates
The following rates were used to translate currency:
Currency Average rate Closing rate
EUR 10.56 10.49
DKK 1.41 1.40
GBP 12.06 12.40
MXN 0.49 0.49
USD 9.43 9.34
Segment reporting
An operating segment is the part of the Group that conducts
business operations from which it may generate revenue
and incur expenses for which discrete financial information is
available. The operating results of an operating segment are
followed up by the Group’s chief operating decision-maker
in order to evaluate its performance and allocate resources
to the operating segment. The Group’s operations are
divided up into operating segments based on which parts of
the operations the Group’s chief operating decision-maker
monitors, that is, according to the management approach.
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