registration document France Telecom 2009 - Orange.com

financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
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CONSOLIDATED STATEMENTS
Therefore, the straight-line basis is usually applied over the
following estimated useful lives:
Buildings and leasehold improvements
Switching, transmission and other network
equipment
Cables and civil works
Computer hardware
Other
10 to 30 years
5 to 10 years
15 to 30 years
3 to 5 years
3 to 14 years
These useful lives are reviewed annually and are adjusted
if current estimated useful lives are different from previous
estimates. These changes in accounting estimates are
recognized prospectively.
An impairment test is performed when there is objective
evidence of impairment, as for instance a decrease in quoted
price when the investee is listed, signifi cant fi nancial diffi culty
of the investee, observable data indicating that there is a
measurable decrease in the estimated future cash fl ows, or
information about signifi cant changes with an adverse effect
over the investee.
An impairment loss is recorded when the recoverable amount
becomes lower to the carrying amount, recoverable amount
being the higher of value in use and fair value less costs to sell
(see Note 2.15). Impairment loss can be reversed when the
recoverable amount exceeds the carrying amount again.
2.13 Impairment of non-current assets
other than goodwill
and trademarks
In the case of a decline in the recoverable amount of an item of
property, plant and equipment or an intangible asset to below its
net book value, due to events or circumstances occurring during
the period (such as obsolescence, physical damage, signifi cant
changes to the manner in which the asset is used, worse than
expected economic performance, a drop in revenues or other
external indicators) an impairment loss is recognized.
The recoverable amount of an asset is the higher of its fair
value less costs to sell and its value in use, assessed by the
discounted cash fl ows method, based on management’s best
estimate of the set of economic conditions.
The impairment loss recognized is equal to the difference
between the net book value and the recoverable amount.
Given the nature of its assets and activities, most of the Group’s
individual assets do not generate independent cash fl ows that
are independent of those from CGUs. The recoverable amount
is then determined at the level of the CGU to which the asset
belongs, except where:
■ the fair value less costs to sell of the individual asset is higher
than its book value; or
■ the value in use of the asset can be estimated as being close
to its fair value less costs to sell, where fair value can be
reliably determined.
2.14 Interests in associates
The carrying amount of investment in associates corresponds
to the initial cost increased to recognize the investor’s share of
the profi t or loss of the investee after the date of acquisition. In
case of losses and after the carrying amount of investment is
reduced to zero, the Group ceases to recognize the additional
share of losses since it is not committed beyond its investment.
2.15 Financial assets and liabilities
Financial assets and liabilities are recognized initially at fair value.
They are subsequently measured either at fair value or amortized
cost using the effective interest method, in accordance with the
IAS 39 category they belong to.
The effective interest rate is the rate that discounts estimated
future cash payments through the expected contractual term, or
the most probable expected term of the fi nancial instrument, to
the net carrying amount of the fi nancial liability. This calculation
includes all fees and points paid or received between parties to
the contract.
Recognition and measurement of financial
assets
The Group does not hold any fi nancial assets qualifying as heldto-maturity
assets.
Available-for-sale assets
Available-for-sale assets consist mainly of shares in nonconsolidated
companies, marketable securities that do
not fulfi ll the criteria for classifi cation in any of the other
categories of fi nancial assets, and certain assets related to insubstance
defeasance transactions and cross-border leases
(Qualifi ed Technological Equipment (QTE) leases). They are
recognized and subsequently measured at fair value. Fair value
corresponds to quoted price for listed securities or, for nonlisted
securities, a valuation technique determined according to
the most appropriate fi nancial criteria in each case (comparable
transactions, multiples for comparable companies, discounted
present value of future cash fl ows).
Temporary changes in value are recorded as “Gains (losses) on
fi nancial assets available-for-sale” within other comprehensive
income.
When there is an objective evidence of impairment for availablefor-sale
assets such as a signifi cant or prolonged decline in
their fair value, cumulative impairment loss included in other
comprehensive is reclassifi ed from equity to income.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM
379