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
Some consider that a part of this contribution might be in the
scope of IAS 12 with the following consequences:
■ the recognition of a deferred tax liability relating to depreciable
assets against profi t or loss; and
■ from 2010, the classifi cation of this part as income taxes.
The CNC communication dated January 14, 2010 considers
that each entity should use its judgment for qualifi cation such
CET as taxes or income taxes considering its own situation. The
Group has therefore analyzed the characteristics of this new tax
and concluded that:
■ on the one hand, the CET is similar to the previous business
tax because of the existence of an added-value based fl oor;
and
■ on the other hand, the qualifi cation of the business tax and
the CET for an operating expense is appropriate regarding
the wording of rejections made by the IFRIC when it decided
not to add to its agenda the distinction between income taxes
and taxes; namely income taxes implies a net result rather
than a gross amount and, given the diverse tax practices it is
useful to use judgment in order to determine whether or not
a tax is in IAS 12 scope.
Deferred taxes
Deferred taxes are recognized for all temporary differences
between the book values of assets and liabilities and their
tax basis, as well as for unused tax losses, using the liability
method. Deferred tax assets are recognized only when their
recovery is considered probable.
A deferred tax liability is recognized for all taxable temporary
differences associated with investments in subsidiaries,
branches and associates, and interests in joint ventures, except
to the extent that both of the following conditions are satisfi ed:
■ the Group is able to control the timing of the reversal of the
temporary difference (e.g. the payment of dividends); and
■ it is probable that the temporary difference will not reverse in
the foreseeable future.
Accordingly, for fully and proportionally consolidated companies,
a deferred tax liability is only recognized in the amount of the
taxes payable on planned dividend distributions by these
companies.
Deferred tax assets and liabilities are not discounted.
At each period end, the Group reviews the recoverable amount
of the deferred tax assets carried by certain tax entities with
signifi cant tax loss carryforwards.
Deferred tax assets arising on these tax losses are not
recognized under certain circumstances specifi c to each
company tax consolidation group concerned, and particularly
where:
■ entities cannot assess the probability of the tax loss
carryforwards being set off against future taxable profi ts, due
to forecasts horizon and uncertainties as to the economic
environment;
■ entities have not yet begun to use the tax loss carryforwards;
■ entities do not expect to use the losses within the timeframe
allowed by tax regulations;
■ tax losses are uncertain to be used due to risks of differing
interpretations with regard to the application of tax legislation.
2.18 Provisions
A provision is recognized when the Group has a present
obligation towards a third-party and it is probable that an outfl ow
of resources embodying economic benefi ts will be required to
settle the obligation.
The obligation may be legal, regulatory or contractual or it
may represent a constructive obligation deriving from the
Group’s actions where, by an established pattern of past
practice, published policies creating a valid expectation on
the part of other parties that the Group will discharge certain
responsibilities.
The estimate of the amount of the provision corresponds to
the expenditure likely to be incurred by the Group to settle its
obligation. If a reliable estimate cannot be made of the amount
of the obligation, no provision is recorded and the obligation is
deemed to be a contingent liability.
Contingent liabilities are disclosed in the notes to the fi nancial
statements. They correspond to:
■ probable obligations that are not recognized because their
existence will be confi rmed only by the occurrence or nonoccurrence
of one or more uncertain future events not wholly
within the Group’s control; or
■ present obligations arising from past events that are not
recognized because it is not probable that an outfl ow of
resources embodying economic benefi ts will be required to
settle the obligation or because the amount of the obligation
cannot be measured with suffi cient reliability.
Restructuring
Provisions for restructuring costs are recognized only when the
restructuring has been announced and the Group has drawn up
or has started to implement a detailed formal plan, prior to the
end of the reporting period.
Provisions for dismantling and restoring sites
The Group is required to dismantle equipment and restore sites.
The provision is based on the best estimate of the amount
required to settle the obligation. It is discounted by applying a
discount rate that refl ects the passage of time, based on market
yields on high quality corporate bonds (or on government bonds
when no corporate bond). This estimate is yearly revised and
adjusted where appropriate against the asset to which it relates.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM