registration document France Telecom 2009 - Orange.com

20 CONSOLIDATED
financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
STATEMENTS
Research costs and development costs not fulfi lling the above
criteria are expensed as incurred.
Capitalized development costs are presented in the same
way as software on the “other intangible assets” line. They are
amortized on a straight-line basis over their expected useful life
generally not exceeding 3 years.
Software is amortized on a straight-line basis over its expected
useful life which does not exceed 5 years.
Other development costs
Website development costs are capitalized when all of the
following conditions are met:
■ it is probable that the website will be successfully developed,
the Group has adequate resources (technical, fi nancial and
other) and has the intention of and the ability to complete the
site and use or sell it;
■ the website will generate future economic benefi ts;
■ the Group has the ability to reliably measure the expenditure
attributable to the website during its development.
Expenditure incurred after the website has been completed is
recorded as an expense, except where it enables the website to
generate future additional economic benefi ts provided it can be
reliably estimated and attributed to the website.
2.12 Property, plant and equipment
Cost
The cost of tangible assets corresponds to their purchase or
production cost, including costs directly attributable to bringing
the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. It
also includes the initial estimate of the costs of dismantling and
removing the item and restoring the site on which it is located,
representing the obligation incurred by the Group.
The cost of networks includes design and construction costs,
as well as capacity improvement costs.
The total cost of an asset is allocated among its different
components and each component accounted for separately,
when the components have different useful lives or when the
pattern in which their future economic benefi ts are expected to
be consumed by the entity varies. Depreciation is then revised
accordingly.
Maintenance and repair costs are expensed as incurred, except
where they serve to increase the asset’s productivity or prolong
its useful life.
Finance leases
Assets acquired under leases that transfer the risks and
rewards of ownership to the Group are recorded as assets and
an obligation in the same amount is recorded in liabilities. The
risks and rewards of ownership are considered as having been
transferred to the Group when:
■ the lease transfers ownership of the asset to the lessee by the
end of the lease term;
■ the Group has the option to purchase the asset at a price
that is expected to be suffi ciently lower than fair value at the
date the option becomes exercisable for it to be reasonably
certain, at the inception of the lease, that the option will be
exercised;
■ the lease term is for the major part of the estimated economic
life of the leased asset;
■ at the inception of the lease, the present value of the minimum
lease payments amounts to at least substantially all of the fair
value of the leased asset.
Most of these agreements relate to network buildings.
Assets leased by the Group as lessor under leases that transfer
the risks and rewards of ownership to the lessee are treated as
having been sold.
Satellite capacity
Contracts relating to satellite capacity have been reviewed in
light of the criteria set out in IFRIC 4. As no specifi c assets
have been identifi ed, these contracts have been classifi ed as
services.
Government grants
The Group may receive non-repayable government grants in
the form of direct or indirect funding of capital projects, mainly
provided by local and regional authorities. These grants are
deducted from the cost of the related assets and recognized in
the income statement, based on the pattern in which the related
asset’s expected future economic benefi ts are consumed.
Depreciation
Property, plant and equipment are depreciated to expense
their cost less any residual value on a basis that refl ects the
pattern in which their future economic benefi ts are expected to
be consumed.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM