Atari 2010 Annual Report Download - page 68

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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of the lease takes into account possible extensions. Land is not depreciated. The estimated useful lives of each category
of asset are as follows:
- Buildings 25 years
- Computer equipment 1 to 3 years
- Furniture and fixtures and fittings (including leasehold improvements) and other equipment 3 to 10 years
In accordance with IAS 23, the Group has not identified direct link interest on borrowings used to purchase property,
plant and equipment hence did not capitalized it in the cost of the asset concerned. All interests on borrowings were
recognized as financial expenses.
2.11. FINANCE LEASES
Assets held under leases which transfer to the Group substantially all of the risks and rewards of ownership (finance
leases) are recognized as property, plant and equipment.
They are capitalized at the inception of the lease at the lower of the fair value of the leased asset and the present value
of the future minimum lease payments.
Items of property, plant and equipment acquired under finance leases are depreciated on a straight-line basis over the
shorter of the estimated useful life of the asset – determined using the same criteria as for assets owned by the Group –
and the lease term.
A corresponding liability is recognized in the balance sheet. Rental payments under operating leases are expensed as
incurred.
2.12. IMPAIRMENT TESTS
The Group regularly performs impairment tests on its assets, including goodwill, intangible assets and property, plant and
equipment. Property, plant and equipment and intangible assets with a finite useful life are tested for impairment
whenever there is an indication that they may be impaired.
The tests consist of comparing the carrying amount of the assets with their recoverable amount, which corresponds to
the higher of an asset’s fair value less costs to sell and its value in use, calculated by reference to the net present value
of the future cash flows expected to be derived from the asset.
When the fair value of an intangible asset (other than goodwill) or an item of property, plant and equipment increases
during a period and its recoverable amount exceeds its carrying amount, any impairment losses recognized in previous
periods are reversed through the income statement.
Goodwill and other intangible assets with an indefinite useful life as well as intangible assets in process are
systematically tested for impairment on a yearly basis and more often when there is an indication that they may be
impaired. These tests are based on the higher of the following values:
• present value of projected operating cash flows over a four-year period, plus a terminal value;
• the net sale price if there is an active market for the asset.
When the sale price less costs to sell cannot be reliably determined, the carrying amount of the asset is compared with
the net present value of future cash flows excluding interest but after tax.
The terminal value is obtained by projecting to perpetuity the present value of future cash flows determined based on the
cash flows of the last year of the business plan using a long-term growth rate. The discount rate used to calculate the
present value of future cash flows corresponds to the average cost of capital for the Group.
If the annual impairment tests reveal that an asset's recoverable amount is lower than its carrying amount, an impairment
loss is recorded to reduce the carrying amount of the asset or goodwill concerned to its fair value.
Any impairment losses recognized on goodwill are not reversed.
2.13. OTHER NON-CURRENT FINANCIAL ASSETS
This item consists of shares in non-consolidated entities, investments in associates, deposits and down-payments made
and loans.
The Group's interests in non-consolidated entities are recognized in accordance with the accounting principles described
in Note 2.2.
Treasury shares held by the parent company or fully consolidated subsidiaries are deducted from equity on the basis of
their purchase price or initial balance sheet value. Gains or losses on sales of treasury shares are eliminated in the
consolidated income statement and recorded in equity.