AB Volvo (publ) – Annual report – 31 December 2025
Industry: automotive
Volvo Groupʼs accounting policies (extract)
New accounting policies 2026 and later
IFRS 18 Presentation and disclosure in financial statements
From January 1, 2027, IFRS 18 Presentation and disclosure in financial statements will become effective. The new standard is endorsed by the EU and will replace IAS 1 Presentation of financial statements. The aim with IFRS 18 is to improve financial reporting to help users of financial statements understand the information and thereby facilitate comparability between companies.
The standard introduces a consistent structure of the income statement with defined categories and required subtotals. Income and expenses shall be classified into one of the main categories: operating, investing, financing, income taxes and discontinued operations. The operating category will include income and expenses arising from the industrial operations and customer-financing, which is considered a specified main business activity. The investing category will include income and expenses arising from certain assets, such as share of income/loss from investments in joint ventures and associated companies, dividends from equity instruments and interest income from cash and cash equivalents. The financing category will include income and expenses arising from liabilities, such as interest expenses on borrowings, lease liabilities and defined benefit pension liabilities, as well as other financial income and expenses. Thus, the new requirements will impact the Volvo Groupʼs current subtotal Operating income, mainly because income/loss from investments in joint ventures and associated companies will be included in the investing category. Also, interest income and expenses will be part of different categories, removing the presentation of finance net.
In the cash flow statement, the existing options for the presentation of interest and dividends paid and received are removed. As customer-financing is a specified main business activity within Volvo Group, interest paid and received will be classified in the cash flows from operating activities. Dividends received will be included in the cash flows from investing activities, while dividends paid will continue to be part of the cash flows from financing activities. Thus, the new requirements will impact the Volvo Groupʼs cash flow statement.
In addition, the standard requires specific disclosures in separate notes of management-defined performance measures (MPM) such as the Volvo Group measure of adjusted operating income and more extensive disclosure about expenses by nature etc. The Volvo Group will finalize the analysis of the IFRS 18 effects during 2026.
No other new and revised accounting standards and interpretations that have been published and are effective in 2026 and later are considered to have a material impact on the Volvo Groupʼs financial statements.
Accounts examples 