This chapter is covered by the Auditors' Report.
Notes to the Parent Company Financial Statements
The financial statements of the Parent Company, Telefonaktiebolaget LM Ericsson, have been prepared in accordance with RFR 2.1 “Reporting in separate financial statements”. RFR 2.1 requires the Parent Company to use the same accounting principles as for the Group, i.e. IFRS to the extent allowed by RFR 2.1.
The main deviations between accounting policies adopted for the Group and accounting policies for the Parent Company are:
Subsidiaries, associated companies and joint ventures
The investments are accounted for according to the acquisition cost method. Investments are carried at cost and only dividends are accounted for in the income statement. An impairment test is performed annually and write-downs are made when permanent decline in value is established.
Contributions to/from subsidiaries and shareholders’ contributions are accounted for according to UFR 2 issued by the Swedish Financial Reporting Board. Contributions to/from Swedish subsidiaries are reported directly in equity, net of taxes, as these transactions are aimed at reducing Swedish taxes. Shareholders’ contributions increase the Parent Company’s investments.
Classification and measurement of financial instruments
IAS 39 Financial Instruments: Recognition and Measurement is adopted, except regarding financial guarantees where the exception allowed in RFR 2.1 is chosen. Financial guarantees are included in Assets pledged as collateral.
Leasing
The Parent Company has one rental agreement which is accounted for as a finance lease in the consolidated statements and as an operating lease in the Parent Company financial statements.
Deferred taxes
The accounting of untaxed reserves in the balance sheet results in different accounting of deferred taxes as compared to the principles applied in the consolidated statements. Swedish GAAP and tax regulations require a company to report certain differences between the tax basis and book value as an untaxed reserve in the balance sheet of the stand-alone financial statements. Changes to these reserves are reported as an addition to, or withdrawal from, untaxed reserves in the income statement.
Pensions
Pensions are accounted for in accordance with the recommendation FAR 4 “Accounting for pension liability and pension cost” from the Swedish Institute of Authorized Public Accountants. According to RFR 2.1, IAS 19 shall be adopted regarding supplementary disclosures when applicable.
Segment information
Segment information is reported according to requirements in the Swedish Annual Accounts Act regarding business segments and geographical areas.
Statement of cash flows
Cash and short-term investments include financial instruments with maturity up to 12 months from the balance sheet date.
Critical accounting estimates and judgments
See Notes to the Consolidated Financial Statements – Note C2, “Critical Accounting Estimates and Judgments”. Major critical accounting estimates and judgments applicable to the Parent Company include “Trade and customer finance receivables” and “Acquired intellectual property rights and other intangible assets, excluding goodwill”.
