Access America 2005 Annual Report Download - page 14

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currency for each Group company
is the currency of the environment
where the enterprise carries on its
activities. Assets and liabilities are
translated at the closing rate on
the balance sheet date and
expenses and income are trans-
lated at the annual average rate
from the functional currency into
the reporting currency. Translation
differences between the functional
currency and reporting currency,
including those arising in the
process of equity consolidation,
are taken to shareholders’ equity
without affecting earnings.
Translation differences between the
transaction currency and functional
currency are reported in earnings.
Accounting and valuation
policies Balance Sheet
Intangible assets
Intangible assets include Goodwill
and other intangible assets such
as exclusivity fees and software
purchased from others or
developed in-house.
Goodwill represents the difference
between the purchase price of
subsidiaries and the proportionate
share of their net assets valued at
the current value of all assets and
liabilities at the time of acquisition.
Goodwill is recognised as an asset
in the balance sheet and is not
amortised.
The Mondial Assistance Group
periodically evaluates the recover-
ability of Goodwill and takes into
account events or circumstances
that warrant revised estimates of
useful lives or that indicate the
existence of an impairment.
Impairment testing for goodwill
is carried out at least annually,
at the end of the year and at each
reporting date, whenever there is
an indication that an asset may be
impaired. The impairment is
recognized through the income
statement and the reversal of an
impairment loss is prohibited.
Intangible assets are measured
initially at cost and are recognised
if it is probable that the future
economic benefits that are
attributable to the asset will flow to
the Group, and the cost of the
asset can be measured reliably.
After initial recognition, intangible
assets are measured at cost less
accumulated amortisation and any
accumulated impairment losses.
Other intangible assets are
amortised using the straight-line
method over their estimated period
of benefit with a maximum of 5 years.
Tangible assets
Tangible assets include property
and other tangible assets such as
equipment.
Property used for its own use and
equipment is stated at cost and
depreciated using the straight-line
method over the shorter of the
estimated life of the asset or the
lease term. Land is not depreciated.
Buildings are depreciated over 50
years, while other tangible assets
included under the heading “Other
assets” over a period of their
estimated useful life at the date
of purchase.
The Group recognises finance
leases as assets and liabilities in the
balance sheets at amounts equal at
the inception of the lease to the fair
value of the leased property. Initial
direct costs incurred are included
as part of the asset. Lease payments
are apportioned between the
finance charge and the reduction of
the outstanding liability. The finance
charge is allocated to periods
during the lease term so as to
produce a constant periodic rate
of interest on the remaining balance
of the liability for each period.
A finance lease gives rise to
depreciation expense for the asset
as well as a finance expense for
each accounting period. The
depreciation policy for leased
assets is consistent with that for
other depreciable assets.
Investments
Investments include securities
available for sale, participations,
mortgages and loans.
Securities available for sale are
accounted for at fair value. Positive
and negative differences between
market value and cost or amortised
cost are included in a separate
component of shareholders’ equity,
net of deferred tax. Realised
gains and losses are principally
determined by applying the average
cost method.
Accounts receivable
The accounts receivable are
carried at nominal value less any
necessary value adjustment.
Deferred acquisition costs
Deferred acquisition costs, which
are incurred in connection with
the acquisition or renewal of
insurance policies, are capitalised
and amortised through the income
statement over the term of the
policies.
Cash and cash equivalents
This item includes balances with
banks payable on demand, cash
on hand and bank deposits with a
maturity of three months or less at
the date of purchase.
The carrying amount of cash with
banks and cash on hand
corresponds to the fair value.
Cash funds are stated at their face
value, with holdings of foreign
notes and coins valued at year-end
closing.