233
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
the financial component, recorded in other financial charges and
income, consists of the undiscounting of the obligation, less the
expected return on plan assets determined using the discount rate
retained for the valuation of the benefit obligation; and
the remeasurements of the net defined benefit liability (asset),
recognized in items of other comprehensive income not reclassified
to profit and loss, mainly consist of actuarial gains and losses, i.e.
changes in the present value of the defined benefit obligation and
plan assets resulting from changes in actuarial assumptions and
experience adjustments (representing the differences between the
expected effect of some actuarial assumptions applied to previous
valuations and the effective effect).
Where the value of plan assets exceeds benefit obligations, a financial
asset is recognized up to the present value of future refunds and the
expected reduction in future contributions.
Some other post-employment benefits, such as life insurance and
medical coverage (mainly in the United States) are subject to provisions
which are assessed through an actuarial computation comparable to the
method used for pension provisions.
On January 1, 2004, in accordance with IFRS 1, Vivendi decided to
record unrecognized actuarial gains and losses against consolidated
equity.
1.3.9.
Deferred taxes
Differences existing at closing between the tax base value of assets
and liabilities and their carrying value in the Consolidated Statement
of Financial Position give rise to temporary differences. Pursuant to the
liability method, these temporary differences result in the accounting of:
deferred tax assets, when the tax base value is greater than the
carrying value (expected future tax saving); and
deferred tax liabilities, when the tax base value is lower than the
carrying value (expected future tax expense).
Deferred tax assets and liabilities are measured at the expected tax
rates for the year during which the asset will be realized or the liability
settled, based on tax rates (and tax regulations) enacted or substantially
enacted by the closing date. They are reviewed at the end of each year,
in line with any changes in applicable tax rates.
Deferred tax assets are recognized for all deductible temporary
differences, tax loss carry-forwards and unused tax credits, insofar as it
is probable that a taxable profit will be available, or when a current tax
liability exists to make use of those deductible temporary differences,
tax loss carry-forwards and unused tax credits, except where the
deferred tax asset associated with the deductible temporary difference
is generated by initial recognition of an asset or liability in a transaction
which is not a business combination, and that, at the transaction date,
does not impact earnings, nor tax income or loss.
For deductible temporary differences resulting from investments in
subsidiaries, joint ventures and other associated entities, deferred tax
assets are recorded to the extent that it is probable that the temporary
difference will reverse in the foreseeable future and that a taxable profit
will be available against which the temporary difference can be utilized.
The carrying value of deferred tax assets is reviewed at each closing
date, and revalued or reduced to the extent that it is more or less
probable that a taxable profit will be available to allow the deferred
tax asset to be utilized. When assessing the probability of a taxable
profit being available, account is taken, primarily, of prior years’
results, forecasted future results, non-recurring items unlikely to occur
in the future and the tax strategy. As such, the assessment of the
group’s ability to utilize tax losses carried forward is to a large extent
judgment-based. If the future taxable results of the group proved to
differ significantly from those expected, the group would be required
to increase or decrease the carrying value of deferred tax assets with a
potentially material impact on the Statement of Financial Position and
Statement of Earnings of the group.
Deferred tax liabilities are recognized for all taxable temporary
differences, except where the deferred tax liability results from goodwill
or initial recognition of an asset or liability in a transaction which is
not a business combination, and that, at the transaction date, does not
impact earnings, nor tax income or loss.
For taxable temporary differences resulting from investments in
subsidiaries, joint ventures and other associated entities, deferred tax
liabilities are recorded except to the extent that both of the following
conditions are satisfied: the parent, investor or venturer is able to
control the timing of the reversal of the temporary difference and it
is probable that the temporary difference will not be reversed in the
foreseeable future.
Current tax and deferred tax shall be charged or credited directly to
equity, and not earnings, if the tax relates to items that are credited or
charged directly to equity.
