FINANCIAL REPORT - Française des Jeux

34 — 2010 FINANCIAL REPORT
3.4.2. Research and development expenditure
Research expenditure incurred by the Group for its own account
is expensed as and when it occurs.
Development expenditure is capitalised as intangible assets
provided it relates to projects with serious prospects for technical
success and economic viability. It includes the valuation of internal
man-hours and subcontracting.
3.4.3. Other intangible assets
Other intangible assets are measured at acquisition cost (purchase
cost plus incidental expenses), less any accumulated amortisation
or accumulated impairment losses.
3.4.4. Depreciation
Intangible assets are amortised over their estimated useful lives
using the straight-line method, unless those lives are indefi nite.
Development costs are amortised over the expected useful life of
the intangible asset using the straight-line method from the time
at which it is available for use. Software programs are amortised
over a period of 2 to 11 years using the straight-line method.
Brands acquired are normally amortised over 10 years.
These amortisation rates are reviewed at the close of each fi nancial
year. All changes to the expected useful life, or to the expected
pattern of consumption of the expected future economic benefi ts
of the asset are taken into account prospectively over time in the
amortisation rate, with such changes being treated, depending
on the case, as changes in estimates.
3.5. PROPERTY, PLANT AND EQUIPMENT
3.5.1. Initial measurement
Property, plant and equipment are measured at acquisition cost
(purchase price plus incidental expenses). If particular items of
property, plant and equipment have different useful lives, they
are recognised separately on the balance sheet.
3.5.2. Depreciation
Property, plant and equipment are depreciated over the useful
lives below, using the straight-line method:
Buildings between 20 and 25 years
Building improvements between 5 and 10 years
Lottery terminals between 2 and 10 years
Furniture and equipment between 2 and 10 years
Residual values and useful lives of assets are reviewed, and
adjusted if necessary, at each balance sheet date.
3.6. IMPAIRMENT OF INTANGIBLE ASSETS
AND PROPERTY, PLANT AND EQUIPMENT
In accordance with IAS 36, intangible assets and property, plant
and equipment are tested for impairment whenever events or
changes in the market environment or internal circumstances
indicate that such assets may be impaired. In the case of intangible
assets not yet put into service, tests for impairment are performed
annually when there are indications of impairment.
The principal indicators of impairment for the Group are:
– regulatory changes
– changes in the market and in the performance of games and
equipment
– technological changes that may render certain equipment
prematurely obsolete
– changes in the offer.
An impairment loss is recognised if the carrying amount of an
asset exceeds its recoverable amount. Impairment losses are
recorded in the income statement.
Impairment losses on goodwill are recorded in operating income
and are irreversible.
3.7. FINANCIAL ASSETS
The Group classifi es its fi nancial assets at initial recognition value
and reviews that classifi cation at each balance sheet date. At initial
recognition, fi nancial assets are measured at cost, including
transaction costs that are directly attributable to the acquisition.
Securities whose holding period at the close of the year is more
than 12 months are classifi ed as non-current.
Securities held in the portfolio classifi ed as available-for-sale assets
and as assets at fair value through profi t or loss are measured at
fair value. The fair value of fi nancial assets actively traded on
organised fi nancial markets is determined at the balance sheet
date by reference to the bid pric es quoted at the close of these
markets. For fi nancial assets for which there is no active market,
fair value is determined using valuation techniques (using recent
arm’s length market transactions, reference to the current fair
value of another instrument that is substantially the same,
discounted cash fl ow analysis or other valuation models).
Potential gains and losses on assets held for sale are recognised
directly in equity; those relating to assets at fair value through
profi t or loss are recognised in income. If there is objective evidence
of significant long-term impairment of an available-for-sale
fi nancial asset, the cumulative loss is irreversibly recognised in
income. Once a fi nancial asset available for sale is derecognised,
the cumulative profit or loss previously carried in equity is
recognised in income.
3.8. INVENTORIES
Inventories are measured at cost or at net realisable value, whichever
is lower. The cost of game equipment and supplies is determined
using the “fi rst in, fi rst out” (FIFO) method.
Inventories are depreciated according to their technical or commercial
obsolescence.