One of the accounting development patterns that was introduced in Chapter 2 was the macroeconomic development model. Under this framework accounting practices are designed to enhance national macroeconomic goals. A national policy advocating stable employment by avoiding major swings in business cycles would sanction accounting practices that smooth income. Similarly, national policies supporting growth in certain industries would sanction rapid write offs of fixed assets to encourage capital formation. Sweden is a good example of this reporting pattern. Assets may be revalued upwards if they are deemed to have °enduring value," the tax law permits shorter asset lives, and ceiling tests for depreciation charges include the higher of 130 percent declining balance method or 20 percent straight line. Companies are also permitted to allocate a portion of pre-tax earnings to special tax equalization reserves which are not available for dividends until reversed.
Reproduced below are the parent company financial statements of Sandvik for the years 2006 and 2007 and selected notes. Sandvik is a global high technology company headquartered in Sweden, with advanced products and well-known brands. Its core areas of competence include high speed tools for metal working, machinery, tools and services for rock excavation, and specialty steels. The company states that it applies all IFRS and IFRIC interpretations approved by the EU to the extent possible within the framework of the Swedish Annual Accounts Act and considering the close tie between financial reporting and taxation. Examine the data presented and answer the following questions.
Show the accounting entry used to create the 2007 Appropriations figure in the income statement.