Atari 2011 Annual Report Download - page 56

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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2.10. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is measured at cost, less accumulated depreciation and any accumulated impairment
losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets concerned.
Leasehold improvements are depreciated over the shorter of their estimated useful life or the term of the lease. The term
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
Atari does not capitalize financial interest related to the acquisition of tangible assets and believes the impact to be
immaterial to the Consolidated Financial Statement of the Group.
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.
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.