1998-Paribas Annual Report - BNP Paribas

72
C) FIXED ASSETS
a) Trademarks and market shares
Goodwill assigned by certain industrial groups and
insurance companies to trademarks and market shares is
not amortized. These identified intangible assets are
reassessed every year, and, in case of a decline in value,
a provision for impairment is set up. Specific methods
adopted by each industrial group as regards depreciation
of their market shares are not restated for consolidation
purposes.
b) Other intangible assets
Preliminary expenses and leasehold rights are charged
to expenses as incurred. Software is amortized over a
period of 12 months.
Software developed internally by the Group is recorded
as expenses, except for software developed for the settlement
of a new activity which are amortized over a
period of five years.
The costs of capital increases of subsidiaries are expensed.
The costs of the parent company’s capital increases are
deducted from the share-issue premiums, net of the
related tax saving.
Bond issue and redemption premiums as well as
expenses related to bond issues are amortized on a
straight line basis over the life of the borrowing.
Clientele acquisition prices are amortized over a period
that does not exceed 10 years.
c) Premises and equipment
Premises and equipment are stated at cost except for
assets of French companies that were revalued in 1978
as authorized by law. They are depreciated on a straightline
basis over their estimated useful lives. Buildings are
generally depreciated over a period of 30 years, furniture,
fixtures and equipment over 10 years, and computer
hardware over 3 years.
D) CREDITS UNDER FINANCE
Credits under finance are classified with customer loans
and credits. The related revenue is included under the
net banking revenue, net of depreciation, computed on
an actuarial basis.
E) INVESTMENTS OF INSURANCE COMPANIES
Securities and shares used to cover accounting unit
exposure, are presented at their year-end liquidation
value.
Among other investments, fixed income securities are
accounted for using the rules applied to investment
securities in the banking sector.
Investments that do not comply with these categories
are accounted for in the balance sheet at cost, minus
provisions for impairment on real estate and equities
and bonds portfolios (Article RR332-20 of the New
Insurance Code). When the combined market value of
all these investments falls short of book value, a provision
for risk is written.
F) SECURITIES, TREASURY BILLS AND SIMILAR
INSTRUMENTS
The valuation method for securities, treasury bills and
similar instruments depends on management's intention
at the time of their purchase.
They are classified as:
- trading securities when the intention is to resell or
repurchase them or to place them with customers after
a short holding period and if they are negotiable on a
liquid market providing an objective basis of valuation.
This category includes bonds and notes acquired to
hedge interest rate exposure related to swaps and other
forward financial instruments;
- securities held for sale when they have been acquired
in order to generate a revenue or gain, with the intention
to hold them for a period of more than six months. They
include bonds not placed on issue and trading securities
held for over six months;
- investment securities (only fixed income securities)
when the intention is to hold them on a long-term basis,
in principle until maturity, and if they are matched by
financing of equivalent maturity, or the interest rate
exposure is hedged.
Trading securities are recorded at cost, including any
acquisition costs and accrued interest. At the end of the
reporting period, the securities not sold or sold short are
valued at market price. The income or charge that
results from the revaluation is shown in the item “Net
income from trading securities”, included in “Net
income from securities transactions and other banking
operations”. This item also includes dividends received
and net proceeds resulting from sales.