2014 Registration Document and Annual Financial Report - page 188

Financial Statemements
Consolidated Financial Statements and Notes
K. Translation of foreign currency
Foreign currency transactions are recognized and measured in
accordance with IAS 21 “Effects of Changes in Foreign Exchange
Rates”. As prescribed by this standard, each Group entity translates
foreign currency transactions into its functional currency at the
exchange rate on the transaction date.
Foreign currency receivables and payables are translated into euros
at the closing exchange rate. Foreign currency financial liabilities
measured at fair value are translated at the exchange rate on the
valuation date. Gains and losses arising from translation are recognized
in “Net financial expense”, except for gains and losses on financial
liabilities measured at fair value which are recognized in equity.
L. Income taxes
Income tax expense (or benefit) includes both current and deferred
tax expense (or benefit).
Current taxes on taxable profits for the reporting period and previous
periods are recognized as liabilities until they are paid.
In accordance with IAS 12 “Income Taxes”, deferred taxes are
recognized on temporary differences between the carrying amount
of assets and liabilities and their tax base by the liability method.
This method consists of adjusting deferred taxes at each period-end,
based on the last tax rates (and tax laws) that have been enacted
or substantively enacted. The effects of changes in tax rates (and
tax laws) are recognized in the income statement for the period in
which the rate change is announced.
A deferred tax is recognized for all temporary differences, except
when it arises from the initial recognition of non-deductible goodwill
or the initial recognition of an asset or liability in a transaction
which is not a business combination and which, at the time of the
transaction, affects neither accounting profit nor taxable profit.
A deferred tax liability is recognized for all taxable temporary
differences associated with investments in subsidiaries, associates
and interests in joint ventures except when:
the Group is able to control the timing of the reversal of the
temporary difference; and
it is probable that the temporary difference will not reverse in
the foreseeable future.
A deferred tax asset is recognized for ordinary and evergreen tax
loss carryforwards only when it is probable that the asset will be
recovered in the foreseeable future based on the most recently
updated projections.
Income taxes are normally recognized in the income statement.
However, when the underlying transaction is recognized in equity,
the related income tax is also recorded in equity.
In accordance with IAS 12, deferred taxes are not discounted.
Since January 1, 2010, deferred tax assets of acquired companies
that are not recognized at the time of the business combination
or during the measurement period are recognized in profit or loss
without adjusting goodwill if they arise from a post-acquisition event.
In France, the
“taxe professionnelle”
local business tax was
replaced in the 2010 Finance Act by the
“Contribution Économique
tax (CET). The CET comprises two separate taxes, a
tax assessed on the rental value of real estate (“CFE”) and a tax
assessed on the value added by the business (“CVAE”). In its 2012
and 2013 financial statements, Accor decided therefore to classify
CVAE as income tax.
The second Amended 2012 Finance Act introduced a 3% surtax on
dividends and other distributions paid by companies that are subject
to French corporate income tax.The surtax is treated as an income
tax expense arising as of the date of the Annual Shareholders’
Meeting at which the dividend is approved. In 2014, the Group
therefore recognized additional income tax expense of €3.7 million
in its financial statements in respect of the 2013 dividends paid in
2014. In 2013, the Group recognized additional income tax expense
of €5.2 million in its financial statements in respect of the 2012
dividends paid in 2013.
M. Share-based payments
M.1. Share-based payments
Stock Option Plans
Accor regularly sets up option plans for executives, as well as for
senior and middle managers. IFRS 2 applies to all stock option
plans outstanding at December 31, 2014. 12 of these plans do not
have any specific vesting conditions except for the requirement for
grantees to continue to be employed by the Group at the starting
date of the exercised period:
for eight plans, grantees must still be employed by the Group at
the starting date of the exercise period;
four other plans are a performance option plan with vesting
conditions based on performance in relation to the market.
The service cost representing consideration for the stock options is
recognized in expense over the vesting period by adjusting equity.
The expense recognized in each period corresponds to the fair value
of equity instruments granted at the grant date, as determined
using the Black & Scholes option-pricing model. The grant date
is defined as the date when the plan’s terms and conditions are
communicated to Group employees corresponding to the dates on
which the Board of Directors approved these plans.
Under IFRS 2, vesting conditions, other than market conditions,
are not taken into account when estimating the fair value of the
options but are taken into account by adjusting the number of equity
instruments included in the measurement of the transaction amount,
so that, ultimately, the amount recognized for goods and services
received as consideration for the equity instruments granted is
based on the number of equity instruments that eventually vest.
Market conditions are taken into account when estimating the fair
value of the equity instruments granted, leading to the options being
valued at a discounted price. The value attributed to the discount
cannot be adjusted, whatever the extent to which the performance
conditions have been met at the end of the vesting period. It is
determined using the Monte Carlo method, which consists of
simulating the performance of Accor shares and the corresponding
index according to a sufficiently large number of Brown scenarios.
Assumptions concerning the probability of options being exercised
are also factored into the Monte Carlo model.
Registration Document 2014
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