231
Annual Report -
2013
-
Vivendi
4
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements |
Consolidated
Financial Statements
| Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
Note 1. Accounting policies and valuation methods
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 operations are reported on a single line of the Statement
of Earnings for the periods reported, comprising the earnings after tax
of discontinued operations until divestiture and the gain or loss after
tax on sale or fair value measurement, less costs to divest the assets
and liabilities of the discontinued operations. In addition, cash flows
generated by discontinued operations are reported on a separate line
of the Statement of Consolidated Cash Flows for the relevant periods.
Accounting principles and valuation methods applicable
specifically to Activision Blizzard (video games), a business
divested in 2013
Revenue and related costs
The major portion of Activision Blizzard revenue is generated by the
sale of boxes for video games, net of a provision for estimated returns
and price guarantees as well as rebates, if any. Regarding video games
with significant online functionality or Massively Multiplayer Online
Role Playing Games, revenues are recorded ratably over the estimated
relationship period with the customer, usually and respectively
beginning in the month following the shipment or upon activation of the
subscription. The estimated relationship period with the customer over
which revenues are recognized currently ranges from a minimum of five
months to a maximum of less than a year. Costs of sales associated
with revenues from the sale of boxes for video games with significant
online functionality are recorded ratably according to the same method
as for revenues.
Content assets
Licensing activities and internally developed franchises are recognized
as contents assets at their acquisition cost or development cost and
are amortized over their estimated useful life on the basis of the rate
at which the related economic benefits are consumed. This generally
leads to an amortization period of 3 to 10 years for licenses, and 11 to
12 years for franchises.
Cost of software for rental, sale or commercialization
Software development costs (video games) are capitalized when,
notably, the technical feasibility of the software is established and they
are deemed recoverable. These costs are mainly generated by Activision
Blizzard as part of the games development process and are amortized
using the estimated revenue method (i.e., based on the ratio of the
current period’s gross revenues to estimated total gross revenues) for a
given product, which generally leads to the amortization of costs over a
maximum period of 6 months commencing on a product’s release date.
Non-capitalized software development costs are immediately recorded
as research and development costs.
1.3.7.
Financial liabilities
Long-term and short-term borrowings and other financial liabilities
include:
bonds and credit facilities, as well as various other borrowings
(including commercial paper and debt related to finance leases) and
related accrued interest;
obligations arising in respect of commitments to purchase non-
controlling interests;
bank overdrafts; and
the negative value of other derivative financial instruments.
Derivatives with positive values are recorded as financial assets in
the Statement of Financial Position.
Borrowings
All borrowings are initially accounted for at fair value net of transaction
costs directly attributable to the borrowing. Borrowings bearing interest
are subsequently valued at amortized cost, applying the effective
interest method. The effective interest rate is the internal yield rate
that exactly discounts future cash flows over the term of the borrowing.
In addition, where the borrowing comprises an embedded derivative
(e.g., an exchangeable bond) or an equity instrument (e.g., a convertible
bond), the amortized cost is calculated for the debt component only,
after separation of the embedded derivative or equity instrument. In the
event of a change in expected future cash flows (e.g., redemption earlier
than initially expected), the amortized cost is adjusted against earnings
to reflect the value of the new expected cash flows, discounted at the
initial effective interest rate.
Commitments to purchase non-controlling interests
Vivendi has granted commitments to purchase non-controlling interests
to certain shareowners of its fully consolidated subsidiaries. These
purchase commitments may be optional (e.g., put options) or firm (e.g.,
forward purchase contracts).
The following accounting treatment has been adopted for commitments
granted on or after January 1, 2009:
upon initial recognition, the commitment to purchase non-controlling
interests is recognized as a financial liability for the present value of
the purchase consideration under the put option or forward purchase
contract, mainly offset through the book value of non-controlling
