Ubisoft 2014 Annual Report Download - page 114

Financial statements
2014
109
Losses are eliminated in the same way as gains, but only to the extent that they are not indicative of
impairment.
Translation of transactions denominated in foreign currencies
Transactions denominated in foreign currencies are translated by applying the exchange rate
prevailing on the date of the transaction.
At closing date, all monetary assets and liabilities denominated in foreign currencies (excluding
derivatives) are translated into euros at the closing exchange rate. Any resulting translation
adjustments are recorded in the income statement.
Non-monetary assets and liabilities denominated in foreign currencies are recorded at the exchange
rate prevailing on the date of the transaction.
Derivatives are measured and recognized in accordance with the methods described in the note on
financial instruments.
Translation into euros of the financial statements of foreign subsidiaries
The operating currency of Ubisoft’s foreign subsidiaries is their local currency, in which they record
most of their transactions. The assets and liabilities of Group companies whose operating currency is
not the euro are translated into euros at the exchange rate prevailing at the end of the accounting
period.
The income and expenses of these companies, along with their cash flows, are translated at the
average exchange rate over the year. Differences arising on translation are recognized directly in
consolidated equity, as a separate item.
Goodwill and fair value adjustments resulting from the acquisition of a foreign entity are considered to
belong to the foreign entity and are therefore expressed in the entity’s operating currency. They are
translated at the closing rate prevailing at the end of the accounting period.
Upon disposal of a foreign subsidiary, the relevant translation reserves recognized in other
comprehensive income are recorded under profit and loss.
The Group does not operate in countries suffering from hyperinflation.
Goodwill
Business combinations are accounted for under the purchase method by acquisition date, which is the
date on which control is transferred to the Group.
Acquisitions since January 1, 2010
For acquisitions made since January 1, 2010, the Group assesses goodwill at the acquisition date as:
 the fair value of the consideration transferred, plus
 the amount recorded for any non-controlling interest in the acquiree; plus if the business
combination is achieved in stages, the fair value of any previously held equity in the acquired
company; less
 the net carrying amount (usually at fair value) for assets acquired and liabilities assumed.
When the difference is negative, a gain for the acquisition on favorable terms is recognized
immediately in income.
The consideration transferred excludes amounts relating to the settlement of pre-existing relationships.
These amounts are generally recognized in profit or loss.
Costs related to the acquisition, other than those related to the issuance of debt or equity securities
that the Group supports the fact of a business combination are expensed as incurred.