Ubisoft 2016 Annual Report Download - page 115

Financial statements
5
Consolidated fi nancial statements asatMarch31, 2016
The fi nancial statements of subsidiaries are included in the
consolidated fi nancial statements from the date on which control
is obtained to the date at which such control ends.
If necessary, the accounting methods of subsidiaries are amended
to align them with those adopted by the Group.
Associates
Associates are entities over which Ubisoft Entertainment SA exercises
signifi cant infl uence on the fi nancial and operational policies but no
control. The consolidated fi nancial statements include the Group
share in the total amount of profi ts and losses recognized by the
associates, using the equity accounting method, starting from the
date when signifi cant infl uence is exercised to the date at which
such infl uence ends.
As at March 31, 2016, all companies of the Group are fully
consolidated.
Transactions eliminated in the consolidated
fi nancial statements
Statement of fi nancial position amounts and income and expenses
resulting from intra-group transactions are eliminated during the
preparation of the consolidated fi nancial statements.
Gains resulting from transactions with associates are eliminated
for the Group’s percentage interest in the company.
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 the closing date, all monetary assets and liabilities denominated
in foreign currencies (excluding derivatives) are translated into
euros at the closing exchange rate. Any resulting foreign exchange
gains and losses 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 fi nancial 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
fl ows, are translated at the average exchange rate over the year.
Differences arising from this translation are recognized directly in
consolidated equity, as a separate item under “foreign exchange
gains and losses”.
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 profi t and loss.
The Group does not operate in countries suffering from hyperinfl ation.
Goodwill
Business combinations are accounted for under the purchase method
by acquisition date, i.e. 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 acquired company;
♦ plus the fair value of any previously held equity in the acquired
company, if the business combination is achieved in stages;
♦ 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 profi t 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.
Any contingent consideration to be paid is recognized at fair value
at the acquisition date. The contingent consideration classifi ed as
equity is not remeasured and its settlement is recorded in equity.
However, for a consideration classifi ed under liabilities, subsequent
changes in the fair value of the contingent consideration are recorded
in profi t or loss.
When rights to share-based payment (replacement award) shall
be given in exchange for rights held by employees of the acquired
company (rights granted by the acquired company) and are
attributable to past service, then all or part of the amount of human
replacement buyer is included in the measurement of the transferred
business combination. To assess this amount, the Group compares
the values based on the market, acquisition date, replacement awards
and rights granted by the acquired business and determining the
- Registration Document 2016 113