2014 Registration Document and Annual Financial Report - page 189

5
Financial Statemements
Consolidated Financial Statements and Notes
When the options are exercised, the cash settlement is recorded
in cash and cash equivalents and in equity.The amount recognized
in equity is allocated between “Share capital” and “Additional
paid-in capital”.
Performance shares plans
Performance shares plans are also recognized and measured in
accordance with IFRS 2. The recognition and the measurement
principles are those used to recognize and measure the stock option
plans excepted for the measurement of the cost of the performance
share plans corresponding to the Accor opening share price on the
grant date less the present value of dividends unpaid multiplied by
the number of shares issued.
M.2. Treasury stock
Accor shares held by the Company and/or subsidiaries are recognized
as a deduction from equity.
Gains and losses on sales of treasury stock (and the related tax
effect) are recognized directly in equity without affecting profit. No
impairment losses are recognized on treasury stock.
M.3. Perpetual subordinated notes
Perpetual subordinated notes are accounted for in accordance with
IAS 32 taking into account their specific characteristics. They are
recorded in equity at historical cost when Accor has an unconditional
right to avoid delivering cash or another financial asset to settle the
contractual obligation.
Interest paid on these notes is recorded as a deduction from equity.
The related taxe effect is booked in Profit and Loss. The interest
paid are taxe deductible.
N. Financial instruments
Financial assets and liabilities are recognized and measured in
accordance with IAS 39 “Financial Instruments, Recognition and
Measurement”, and its amendments.
Financial assets and liabilities are recognized in the statement of
financial position when the Group becomes a party to the contractual
provisions of the instrument.
N.1. Financial assets
Financial assets are classified between the three main categories
defined in IAS 39, as follows:
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“Loans and receivables” mainly comprise time deposits and
loans to non-consolidated companies.They are initially recognized
at fair value and are subsequently measured at amortized cost
at each balance-sheet date. If there is an objective indication of
impairment, an impairment loss is recognized at the balance-sheet
date.The impairment loss corresponds to the difference between
the carrying amount and the recoverable amount (
i.e.
the present
value of the expected cash flows discounted using the original
effective interest rate) and is recognized in profit or loss. This
loss may be reversed if the recoverable amount increases in a
subsequent period.
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“Held to maturity investments” mainly comprise bonds and
other money market securities intended to be held to maturity.
They are initially recognized at fair value and are subsequently
measured at amortized cost at each balance-sheet date. If there
is an objective indication of impairment, an impairment loss
is recognized at the balance-sheet date. The impairment loss
corresponds to the difference between the carrying amount and
the recoverable amount (
i.e.
the present value of the expected
cash flows discounted using the original effective interest rate)
and is recognized in profit or loss. This loss may be reversed if
the recoverable amount increases in a subsequent period.
For these two categories, initial fair value is equivalent to acquisition
cost, because no material transaction costs are incurred.
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“Available-for-sale financial assets” mainly comprise investments
in non-consolidated companies, equities, mutual fund units and
money market securities. These assets are measured at fair
value, with changes in fair value recognized in equity. The fair
value of listed securities corresponds to market price (level 1
valuation technique: see Note 2.R) and the fair value of unlisted
equities and mutual funds corresponds to their net asset value
(level 1 valuation technique: see Note 2.R). For unlisted securities,
fair value is estimated based on the most appropriate criteria
applicable to each individual investment (using level 3 valuation
techniques that are not based on observable data: see Note 2.R).
Securities that are not traded on an active market, for which fair
value cannot be reliably estimated, are carried in the statement of
financial position at historical cost plus any transaction expenses.
When there is objective evidence of a significant or prolonged
decline in value, the cumulative unrealized loss recorded in equity
is reclassified to the income statement and can’t be reversed.
N.2. Derivative financial Instruments
Derivative financial instruments such as interest rate and currency
swaps, caps and forward purchases of foreign currencies, are
used solely to hedge exposures to changes in interest rates and
exchange rates.
They are measured at fair value. Changes in fair value are recognized
in profit, except for instruments qualified as cash flow hedges
(hedges of variable rate debt) for which changes in fair value are
recognized in equity.
The fair value of interest rate derivatives is equal to the present value
of the instrument’s future cash flows, discounted at the interest
rate for zero-coupon bonds.
The fair value of currency derivatives is determined based on the
forward exchange rate at the period-end.
Registration Document 2014
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