N O TE 39 A ccounting principle s The Parent Compan y’ s fnancial s t atements are prepared in accor dance with the S w edish Annual Accounts Act and the S w edish f inancial R eportin g Boar d’ s s t andar d RFR 2 Accountin g for Le gal Entities. The Parent Compan y thus follo ws the same accountin g principles as the Group when rele v ant and e x cept in the cases s t ated belo w . The diferences that e xis t bet w een the Parent Compan y’ s and the Group ’ s accountin g principles are a result of the res trictions that the S w edish Annual Accounts Act , the S w edish Act on Safe guar din g of Pension Commitments and the options that R f R 2 allo w for IFRS in the Parent Compan y . RFR 2: IFRS 3 Business combinations The Parent Compan y measures the acquisition cos t as the sum of the acqui - sition-date fair v alues of assets tr ansferred, liabilities incurred and all cos ts that are directly at tribut able to the acquisition. Contin g ent consider ations are recogniz ed as part of the acquisition cos t if it is probable that the y will be realiz ed. The acquisition cos t is adjus ted in subsequent periods if the initial assessment needs to be re vised. RFR 2: IAS 17 Leases A complete implement ation on le gal entit y le v el of accountin g for fnance leases is sometimes difcult to achie v e since specifc or dinances for the t axation based on such accountin g are not a v ailable or are not complete . Finance leases can therefore on le gal entit y le v el be accounted for accor din g to the requirements for oper ational leases. This limit ation lacks pr actical implications since the Parent Compan y has not entered into an y leasin g a greements that could be classifed as fnance leases. RFR 2: IAS 18 R e v enue Anticipated dividend from a subsidiar y is recogniz ed as income in the Parent Compan y in accor dance with RFR 2 if the Parent Compan y has the e x clusiv e rig ht to decide the amount of the dividend from the subsidiar y . The Parent Compan y mus t furthermore ensure that the dividend is in line with the sub - sidiar y’ s dividend capacit y . Extr a dividends are sometimes a complement to the anticipated dividend. If so , the y are accounted for on a cash basis. RFR 2: IAS 19 Emplo y ee benefts Accountin g for defned beneft plans accor din g to the S w edish Act on Safe guar din g of Pension Commitments leads to diferences bet w een the accountin g in the Parent Compan y and the Group . These diferences ha v e no material impact on the emplo y ee benefts relatin g to the emplo y ees of the Parent Compan y . Pension solutions either fall within the fr amew ork of the ITP –plan that is insured via Alect a, which is described in note 31, or in all material aspects consis t of other defned contribution plans. RFR 2: IAS 21 The efects of chan g es in foreign e x chan g e r ates Par a gr aph 32 in IAS 21 s t ates that e x chan g e diferences that form part of a reportin g entit y’ s net in v es tments in a foreign oper ation shall be recogniz ed via the s t atement of income in the separ ate fnancial s t atements of the reportin g entit y . RFR 2 s t ates that such e x chan g e diferences ins tead should be recogniz ed directly in shareholder s ’ equit y in accor dance with par a gr aph 14 d in chapter 4 of the S w edish Annual Accounts Act . Securit as AB follo ws RFR 2 and recogniz es e x chan g e diferences that fulfll the criteria for net in v es tment hed g es, that is for which set tlement is neither planned nor lik ely to occur in the foreseeable future , via the tr anslation reser v e in equit y . RFR 2: IAS 27 Consolidated and separ ate fnancial s t atements The Parent Compan y has chosen to early adopt the chan g e in RFR 2 IAS 27 related to Group contributions. The Parent Compan y has adopted the alter - nativ e rule , which means that Group contributions from subsidiaries as w ell as Group contributions to subsidiaries are accounted for as appropriations in the s t atement of income . The efect on the res t ated compar ativ e y ear 2011 is that group contribu - tions net ha v e impacted tot al fnancial income and e xpenses with M SEK -318.7, while tot al appropriations ha v e increased with M SEK 318.7. There has been no impact on t ax es, net income for the y ear or ret ained earnin g s. The efect on the res t ated compar ativ e y ear 2010 is that group contribu - tions net ha v e impacted tot al fnancial income and e xpenses with M SEK 439.6, while tot al appropriations ha v e decreased with M SEK -439.6. There has been no impact on t ax es, net income for the y ear or ret ained earnin g s. RFR 2: IAS 39 Financial ins truments: R ecognition and measurement The Parent Compan y follo ws IAS 39 with the e x ception of fnancial guar an - tees in relation to subsidiaries. f or further information refer to the account - in g principles adopted b y the Group for recognition and measurement of fnancial ins truments in note 2. Capit al contributions Shareholder s ’ capit al contributions are accounted for as an increase of the balance sheet item shares in subsidiaries. An assessment whether an y impairment write-do wn is required in shares in subsidiaries is subsequently made . Securit as ’ share-based incentiv e scheme In addition to the Group ’ s accountin g principles for share-based pa yments (IFRS 2) as described in note 2 Accountin g principles, the follo win g has been applied in the Parent Compan y’ s fnancial s t atements. The Parent Compan y has secured the deliv er y of shares accor din g to Securit as share- based incentiv e scheme b y enterin g into a s w ap a greement with a thir d part y re gar din g purchase of shares. T o the e xtent that shares accor din g to the s w ap a greement is subject to deliv er y to emplo y ees in other Group companies than the Parent Compan y , a liabilit y to Group companies has been recor ded in the Parent Compan y’ s accounts. This liabilit y is recor ded at the v alue of the commitment that Securit as AB has to the subsidiaries to deliv er shares, that is the number of shares to be deliv ered accor din g to the s w ap a greement at the lates t share price for Securit as AB ’ s series B share . Social securit y e xpenses are calculated based on the mark et v alue of the shares that potentially will be allocated. Fluctuations in the share price for these shares thus lead to chan g es in social securit y e xpenses that impact the Parent Compan y’ s and Group ’ s income . This is the only impact on the Parent Compan y’ s and Group ’ s income due to fuctuations in the share price for the shares that potentially will be allocated. This means that an y possible increase or decrease of the liabilit y to Group companies has not been accounted for in the Parent Compan y’ s income s t atement . N ot es 123 Securit as Annual R eport 2012 Annual R eport Notes and comments to the Parent Compan y fnancial s t atements