financial report and registration document 2011 - Groupe SEB

The assumptions used – which mainly concern impairment tests on noncurrent
assets – and the sensitivity of reported amounts to changes in these
assumptions are presented in the relevant notes to these consolidated
fi nancial statements, in accordance with IAS 36.
Estimates may be adjusted following any change in the circumstances on
which they were based or when any new information comes to light. Actual
results may differ from these estimates and assumptions.
The main estimates and assumptions used to prepare the consolidated
fi nancial statements concern the measurement of pension and other postemployment
benefi t obligations (Note 22.1), deferred taxes (Note 1.4.9),
property, plant and equipment (Note 1.4.3), intangible assets (Notes 1.4.1 and
10), investments in associates and other investments, impairment of current
assets (Notes 1.4.5 and 1.4.6), short and long-term provisions (Notes 1.4.10
and 1.4.11), certain fi nancial instruments (Note 1.4.4 - Derivative instruments)
and share-based payments (Note 1.4.10).
Note 1.4. ACCOUNTING POLICIES
AND VALUATION METHODS
The fi nancial statements of Group companies are prepared in accordance
with local generally accepted accounting principles. They are restated where
necessary to comply with Group accounting policies.
The notes to the consolidated fi nancial statements include analyses of assets
and liabilities by maturity where disclosure of this information is required
under IFRS.
The methods used to measure intangible assets, property, plant and
equipment, inventories and trade receivables are described below.
1.4.1. Intangible assets
A) DEVELOPMENT COSTS
Under IAS 38 – Intangible Assets, research costs are recognised as an
expense and development costs are recognised as an intangible asset when
the Group can demonstrate (IAS 38, paragraph 57):
� its intention to complete the development project;
� that it is probable that the expected future economic benefi ts attributable
to the asset will fl ow to the Group;
� its ability to reliably measure the cost of the asset.
Development costs that do not fulfi l the above criteria are expensed as
incurred.
In the consolidated fi nancial statements, qualifying development costs
incurred after the advance design phase and before the manufacturing phase
are recognised as intangible assets.
Development costs are amortised on a straight-line basis over three to
fi ve years, corresponding to the same useful life as that applied to specifi c
tooling.
Financial Report and Registration Document 2011
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Consolidated fi nancial statements
Notes to the consolidated fi nancial statements
B) OTHER INTANGIBLE ASSETS
Software licences and internal software development costs are recognised as
intangible assets when it is probable that they will generate future economic
benefi ts. They are amortised by the straight-line method over periods ranging
from three to fi ve years. Other software licences and software development
costs are expensed as incurred.
Patents, licences and trademarks with a fi nite useful life are amortised over
the shorter of the period of legal protection and their expected useful life,
not to exceed fi fteen years.
Trademarks with an indefi nite useful life are not amortised but are tested
for impairment.
C) GOODWILL
Goodwill, corresponding to the excess of the Group’s interest in the net
fair value of the identifi able assets and liabilities acquired in a business
combination over the consideration transferred, is recognised in the
balance sheet as an asset under “Goodwill”. The consideration transferred
is measured as the fair value of assets transferred, equity instruments
issued and liabilities incurred by the acquirer to the former owner on the
acquisition date, plus any contingent consideration. In the case of a business
combination achieved in stages, the difference between the carrying amount
of the previously held interest and its acquisition-date fair value is recognised
directly in the income statement on the acquisition date under “Other
operating income and expense”.
For each business combination, any non-controlling interest in the acquiree
may be measured either at fair value on the acquisition date (full goodwill
method) or at the non-controlling interest’s proportionate share of the
acquiree’s identifi able net assets (partial goodwill method).
The fair values provisionally attributed to identifi able assets and liabilities,
non-controlling interests measured at fair value and the various components
of the consideration transferred may be adjusted for a period of twelve
months after the acquisition date. After that period, any adjustments are
recognised prospectively in profi t or loss with no adjustment to goodwill.
Goodwill is not amortised but is tested for impairment at least once a
year. For impairment testing purposes, goodwill is allocated to a Cash-
Generating Unit (CGU), defi ned as the smallest identifi able group of assets
that generates cash infl ows that are largely independent of the cash infl ows
from other assets or groups of assets.
The method used to test CGUs for impairment is described in Note 1.4.3.
When a CGU is found to be impaired, an impairment loss corresponding
to the difference between the carrying amount of the goodwill and its
recoverable amount is recognised as other operating expense. Impairment
losses on goodwill are not reversible.
Negative goodwill is recognised directly in the income statement under
“Other operating income and expense” and is attributed in full to the acquirer.
1.4.2. Property, plant and equipment
Property, plant and equipment are initially recognised at cost and are
depreciated by the straight-line method over their estimated useful lives.
GROUPE SEB
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