Group notes
Note 2 Critical accounting estimates and judgments
The preparation of financial reports requires management’s judgment and the use of estimates and assumptions that affect the amounts reported in the Group’s financial statements. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the prevailing circumstances. Actual results may differ from those estimates. The estimates and assumptions are reviewed on an on-going basis. Changes in accounting estimates are recognized in the period in which they are revised and in any future periods affected.
The estimates and the judgments which, in the opinion of management, are significant to the underlying amounts included in the financial reports and for which there is a significant risk that future events or new information could entail a change in those estimates or judgments are presented in connection to the items considered to be affected. The table discloses where to find these descriptions.
| Critical accounting estimates and judgments | Note |
|---|---|
| Business combinations | 3. Acquisitions and divestments |
| Revenue recognition | 4. Segment information and revenues |
| Impairment of goodwill | 13. Intangible assets |
| Inventories | 17. Inventories |
| Trade and financial receivables | 18. Trade receivables |
The Group's assessment of how climate related issues might affect the business has been integrated into its strategic and financial planning process. At the same time, the Group reviews the potential impact of the material risks and opportunities on the balance sheet, critical accounting estimates and accounting policies including the useful economic lives of intangible and tangible assets.
The Group has issued green bonds to support the implementation of the transition plan. Epiroc is allocating funds that directly contribute to our 2030 climate goals. Sustainability targets are included in the variable compensation plans for all Group management members, including the President and CEO. Relevant sustainability targets, such as safety, CO2e reductions, or a mix of targets, are also set for other managers and employees based on their roles and responsibilities.
In summary, the Group’s climate change considerations did not have a material impact on the consolidated financial reports or on the critical accounting estimates and judgments during the year.