Annual Report 2000 - Skanska

They also include depreciation on fixed assetsused for construction, manufacturing andproperty management. Skanska appliesstraight-line depreciation based on the estimatedservice life of the assets.Information on expenses for operatingleases includes contracts with remaining feesof at least SEK 10 M.Selling and administrative expensesIn conformity with an industry-wide recommendationfrom the Swedish ConstructionFederation, selling and administrativeexpenses are reported as one item. Thisincludes customary administrative expenses,technical expenses, selling expenses anddepreciation on machinery and equipmentthat have been used for sales and administration.Depreciation of goodwill that has arisenfrom the acquisition of subsidiaries is alsoreported as a selling and administrativeexpense. The depreciation period has beendecided after individual examination andvaries between 5 and 20 years.Research and development expenses arenot capitalized, but instead are reported in thesame year that the expenses occurred.Separately reported operating itemsOnly divestments, writedowns and reversals ofwritedowns on properties that belong to theGroup’s real estate operations are separatelyreported.Share of income in associated companies isapportioned in the consolidated income statementamong “Operating income” (share of incomeafter financial items),“Taxes”and “Minorityinterests.” Share of income in partnershipsand limited partnerships, including their foreigncounterparts, is reported in its entiretyunder operating income, except for a smallnumber of holdings in limited partnershipsthat are reported under net financial items.Taxes on profit for the yearTaxes based on net profit are reported as“Taxes on profit for the year.” Deferred tax liabilitiesare estimated on the basis of the applicabletax rate in each respective country.Balance sheetIntangible fixed assetsIntangible fixed assets are reported at acquisitioncost minus accumulated depreciation. Incase of a permanent reduction in value, theyare written down to estimated actual value.Tangible fixed assetsTangible fixed assets are reported at acquisitioncost minus accumulated depreciation.They are written down in case of a permanentreduction in value. The writedown is reversedwhen the basis for the writedown has whollyor partially ceased to exist.Investment propertiesIn estimating the actual value of investmentproperties, Skanska has used the prevailinglevels of return required in each respectivemarket as its basis.To permit as correct a comparison as possiblebetween income from property managementand the value of completed investmentproperties, completed properties are not normallyreclassified as “Investment properties”until January 1 of the year after the year ofcompletion. However, completed currentassetproperties are only reclassified as “Investmentproperties” if divestment has notoccurred by the end of the year following theyear of completion.Properties constructed by the Group andbooked during the year as completed propertieshave been valued in the consolidatedaccounts at incurred costs plus a fair proportionof indirect costs.Interest expenses during the constructionperiod are not capitalized, but are booked asexpenses in each respective year.Financial leasing contractsIn compliance with Recommendation No. 6 ofthe Swedish Financial Accounting StandardsCouncil, financial leasing contracts arereported when the investment is equivalent toat least SEK 50 M.Financial fixed assetsFinancial fixed assets are normally reported atacquisition cost. In case of reduction in value,however, they are written down to their actualvalue. Deferred tax claims are estimated on thebasis of the appropriate tax rate in each country.Holdings in associated companies arereported according to the equity method ofaccounting.Current assetsCurrent assets have been valued according tothe lower value principle.Properties intended to be divested in connectionwith contracting projects are reportedas current assets. The same applies to holdingsin property management companies if theproperties belonging to these companieswould have been reported the same way ifSkanska owned them directly.In valuation of inventories, RecommendationNo. 2 of the Swedish Financial AccountingStandards Council has been applied.Shareholders’ equityIf a revenue item has been reported earlier inthe consolidated accounts than in the accountsof an individual company, due to different valuationprinciples, it is transferred from “Unrestrictedreserves” to “Restricted reserves,” takingtaxation into account.Group contributions, taxes attributable tothese and shareholder contributions providedwhen receiving Group contributions aredirectly reported in the Parent Companyaccounts under “Retained earnings.”ProvisionsProvisions for deferred taxes on untaxedreserves have been reported at the applicabletax rate in each country. The correspondingprovisions have also been made if a profit isreported in the consolidated accounts earlierthan it is reported at the company level.ACCOUNTING AND VALUATION PRINCIPLES Skanska Annual Report 2000 19