2014 Registration Document and Annual Financial Report - page 274

Financial Statemements
Parent Company Financial Statements and Notes
5
Notes 1 to 27 set out below form an integral part of the financial statements.
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of Accor SA have been prepared in
accordance with French generally accepted accounting principles,
including the principles of prudence, materiality and segregation of
accounting periods, for the purpose of giving a true and fair view
of the assets, liabilities and financial position of the Company and
the results of its operations.They are presented on a going concern
basis and accounting methods have been applied consistently from
one year to the next.
Assets recorded in the balance sheet are stated at historical cost
or contributed value, as applicable.
The significant accounting policies used are described below.
Concerning Notes a) and b):
since January 1, 2005, the Company
has applied standards CRC 2004-06 relating to the definition,
recognition and measurement of property, plant and equipment
and intangible assets, and CRC 2002-10 relating to the depreciation,
amortization and impairment of these assets.
Property and equipment and intangible assets are recognized when
the following two conditions are met:
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it is probable that the expected future economic benefits that are
attributable to the asset will flow to the Company;
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the cost or value of the asset can be reliably measured.
a) Intangible assets
Purchased intangible assets are measured at cost less accumulated
amortization and any accumulated impairment losses. Intangible
assets with finite useful lives are amortized on a straight-line basis
over their estimated useful lives, corresponding to between two
and five years for software and between three and five years for
licenses. Leasehold rights, networks and trademarks with indefinite
useful lives are not amortized. Their value is assessed whenever
events or circumstances indicate that they may be impaired. If an
assessment of fair value based on the same criteria as at the time
of acquisition indicates the existence of a prolonged impairment
in value, a provision is recorded.
b) Property and equipment
Property and equipment are stated at cost, corresponding to i)
the asset’s purchase price, ii) any costs directly attributable to
bringing the asset to the location and condition necessary for it to
be capable of operating in the manner intended by Management,
and iii) borrowing costs directly attributable to the construction or
production of the asset.
Property and equipment are depreciated on a straight-line basis
over their estimated useful lives, as follows:
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buildings: 35 to 50 years;
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fixtures and fittings: 7 to 25 years;
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other property and equipment: 5 to 15 years.
a and b bis) Fair values of intangible assets
and property and equipment
At each year-end, the Company determines whether there are any
indicators of impairment in value of intangible assets or property and
equipment. Impairment indicators include obsolescence, physical
damage, significant changes in the manner in which the asset is
used, lower-than-expected economic performance, a steep fall in
revenues, or other external indicators.Where there is an indication
that the value of an asset may be impaired, its present value is
assessed and compared with its carrying amount for the purpose
of calculating the potential impairment charge.
The present value of an asset is deemed to be the higher of its fair
value or value in use.
c) Investments
Shares in subsidiaries and affiliates are stated at cost. Transaction
costs on these assets are recorded in the income statement.
At each year-end, the Company determines whether there are any
indicators of impairment in value of its investments. Impairment
indicators include lower-than-expected economic performance, a
drop in share price, rating downgrades and steep falls in revenue
or earnings.
Where there is an indication that the value of an asset may be
impaired, its present value is assessed and comparedwith its carrying
amount for the purpose of calculating the potential impairment
charge. The present value of an investment is deemed to be the
higher of its fair value or value in use.
Accor considers that the most appropriate method for measuring the
fair value of its investments is to calculate its equity in the underlying
net assets of the subsidiaries and affiliates concerned. Another
method used for investments in hotel companies is to calculate their
average EBITDA for the last two years and apply a multiple based
on the type of hotels owned by the company concerned and their
financial position. Accor also uses comparable recent transactions
for the purpose of calculating fair values.
Registration Document 2014
272
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