Page 229 - 2012 Annual Report

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VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
4
III - CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Accounting policies and valuation methods
✱ contingent consideration in a business combination is recorded at
fair value on the acquisition date, and any subsequent adjustment
occurring after the purchase price allocation period is recognized in
the Statements of Earnings;
✱ acquisition-related costs are recognized as expenses when incurred;
✱ in the event of the acquisition of an additional interest in a subsidiary,
Vivendi recognizes the difference between the acquisition price and
the carrying value of non-controlling interests acquired as a change in
equity attributable to Vivendi SA shareowners; and
✱ goodwill is not amortized.
Business combinations prior to January 1, 2009
Pursuant to IFRS 1, Vivendi elected not to restate business combinations
that occurred prior to January 1, 2004. IFRS 3, as published by the IASB
in March 2004, retained the acquisition method. However, its provisions
differed from those of the revised standard on the main following items:
✱ minority interests were measured at their proportionate share
of the acquiree’s net identifiable assets as there was no option of
measurement at fair value;
✱ contingent consideration was recognized in the cost of acquisition
only if the payment was likely to occur and the amounts could be
reliably measured;
✱ transaction costs that were directly attributable to the acquisition
formed part of acquisition costs; and
✱ in the event of the acquisition of an additional interest in a subsidiary,
the difference between the acquisition cost and the carrying value of
minority interests acquired was recognized as goodwill.
1.3.5.3. CONTENT ASSETS
Activision Blizzard
Licensing activities and internally developed franchises are recognized
as content assets at their acquisition cost or development cost (please
refer to Note 1.3.5.4 below) and are amortized over their estimated useful
life on the basis of the rate at which the related economic benefits are
consumed. Where appropriate, impairment loss is fully recognized against
earnings for the period during which the loss is identified. This generally
leads to an amortization period of 3 to 10 years for licenses, and 11 to 12
years for franchises.
UMG
Music publishing rights and catalogs include music catalogs, artists’
contracts and publishing rights, acquired through business combinations,
are amortized over a period of 15 years in selling, general and
administrative expenses.
Royalty advances to artists, songwriters, and co-publishers are capitalized
as an asset when their current popularity and past performances provide
a reasonable basis to conclude that the probable future recoupment of
such royalty advances against earnings otherwise payable to them is
reasonably assured. Royalty advances are recognized as an expense as
subsequent royalties are earned by the artist, songwriter or co-publisher.
Any portion of capitalized royalty advances not deemed to be recoverable
against future royalties is expensed during the period in which the loss
becomes evident. These expenses are recorded in cost of revenues.
Royalties earned by artists, songwriters, and co-publishers are recognized
as an expense in the period during which the sale of the product occurs,
less a provision for estimated returns.
Canal+ Group
Film, television or sports broadcasting rights
When entering into contracts for the acquisition of film, television or
sports broadcasting rights, the rights acquired are classified as contractual
commitments. They are recorded in the Statement of Financial Position
and classified as content assets as follows:
✱ film and television broadcasting rights are recognized at their
acquisition cost, when the program is available for screening and are
expensed over their broadcasting period;
✱ sports broadcasting rights are recognized at their acquisition cost, at
the opening of the broadcasting period of the related sports season or
upon the first payment and are expensed as they are broadcast; and
✱ expensing of film, television or sports broadcasting rights is included
in cost of revenues.
Theatrical film and television rights produced or acquired to be sold
Theatrical film and television rights produced or acquired before their
initial exhibition, to be sold, are recorded as a content asset at capitalized
cost (mainly direct production and overhead costs) or at their acquisition
cost. Theatrical film and television rights are amortized, and other related
costs are expensed, pursuant to the estimated revenue method (i.e.,
based on the ratio of the current period’s gross revenues to estimated
total gross revenues from all sources on an individual production basis).
Vivendi considers that amortization pursuant to the estimated revenue
method reflects the rate at which the entity plans to consume the future
economic benefits related to the asset. Accumulated amortization under
this rate is, for this activity, generally not lower than the charge that would
be obtained under the straight-line amortization method. If, however, the
accumulated amortization would be lower than this charge, a minimum
straight-line amortization would be calculated over a maximum 12-year
period, which corresponds to the typical screening period of each film.
Where appropriate, estimated losses in value are provided in full against
earnings for the period in which the losses are estimated, on an individual
product basis.