Page 232 - 2012 Annual Report

232 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
Financial assets at fair value
Financial assets at fair value include available-for-sale securities,
derivative financial instruments with a positive value (please refer to
Note 1.3.7) and other financial assets measured at fair value through profit
or loss. Most of these financial assets are actively traded in organized
public markets, their fair value being calculated by reference to the
published market price at period end. For financial assets for which there
exists no published market price in an active market, fair value is then
estimated. As a last resort, the group values financial assets at historical
cost, less any impairment losses, when a reliable estimate of fair value
cannot be made using valuation techniques in the absence of an active
market.
Available-for-sale securities consist of unconsolidated interests and other
securities not qualifying for classification in the other financial asset
categories described below. Unrealized gains and losses on available-for-
sale securities are recognized in charges and income directly recognized
in equity until the financial asset is sold, collected or removed from the
Statement of Financial Position in another way, or until there is objective
evidence that the investment is impaired, at which time the accumulated
gain or loss previously reported in charges and income directly recognized
in equity is expensed in other financial charges and income.
Other financial assets measured at fair value through profit or loss mainly
consist of assets held for trading which Vivendi intends to sell in the near
future (primarily marketable securities). Unrealized gains and losses on
these assets are recognized in other financial charges and income.
Financial assets at amortized cost
Financial assets at amortized cost consist of loans and receivables
(primarily loans to affiliates and associates, current account advances to
equity affiliates and unconsolidated interests, cash deposits, securitized
loans and receivables, and other loans and receivables, and debtors) and
held-to-maturity investments (financial assets with fixed or determinable
payments and fixed maturity). At the end of each period, these assets are
measured at amortized cost using the effective interest method. If there is
objective evidence that an impairment loss has been incurred, the amount
of this loss, measured as the difference between the financial asset’s
carrying value and its recoverable amount (equal to the present value
of estimated future cash flows discounted at the financial asset’s initial
effective interest rate), is recognized in profit or loss. Impairment losses
may be reversed if the recoverable amount of the asset subsequently
increases in the future.
1.3.5.9. INVENTORIES
Inventories are valued at the lower of cost or net realizable value.
Cost comprises purchase costs, production costs and other supply and
packaging costs. They are usually computed at the weighted average cost
method. Net realizable value is the estimated selling price in the normal
course of business, less estimated completion costs and selling costs.
1.3.5.10. TRADE ACCOUNT RECEIVABLES
Trade accounts receivable are initially recognized at fair value, which
generally equals the nominal value. Provisions for impairment of
receivables are specifically evaluated in each business unit, generally
using a default percentage based on the unpaid amounts during one
reference period related to revenues for this same period. Thus, for
the group’s businesses which are based partly or fully on subscription
(Activision Blizzard, Canal+ Group, SFR and GVT), the depreciation rate of
trade account receivables is assessed on the basis of historical account
receivables from former customers, primarily on a statistical basis. In
addition, account receivables from customers subject to insolvency
proceedings or customers with whom Vivendi is involved in litigation or a
dispute are generally impaired in full.
1.3.5.11. CASH AND CASH EQUIVALENTS
The “cash and cash equivalents” category consists of cash in banks,
monetary UCITS, which satisfy AMF position No. 2011-13, and other highly
liquid investments with initial maturities of generally three months or
less. Investments in securities, investments with initial maturities of more
than three months without the possibility of early termination and bank
accounts subject to restrictions (blocked accounts), other than restrictions
due to regulations specific to a country or activity sector (e.g., exchange
controls), are not classified as cash equivalents but as financial assets.
Moreover, the historical performance of the investments is monitored
regularly to confirm their cash equivalents accounting classification.
1.3.6. Assets held for sale and discontinued operations
A non-current asset or a group of assets and liabilities is held for
sale when its carrying value may be recovered principally through its
divestiture and not by its continued utilization. To meet this definition,
the asset must be available for immediate sale and the divestiture must
be highly probable. These assets and liabilities are recognized as assets
held for sale and liabilities associated with assets held for sale, without
offset. The related assets recorded as assets held for sale are valued at
the lowest value between the fair value (net of divestiture fees) and the
carrying value, or cost less accumulated depreciation and impairment
losses, and are no longer depreciated.
An operation is qualified as discontinued when it represents a separate
major line of business and the criteria for classification as an asset held
for sale have been met or when Vivendi has sold the asset. Discontinued