APC 2005 Annual Report Download - page 115

113
Consolidated Financial Statements
29.4 - Standards with little
or no impact on the Group accounts
29.4.1 - Consolidation scope and methods
Application of the control criteria set out in IAS 27 –
Consolidated Financial Statements And Accounting
For Investments In Subsidiaries
– has not led to any
change in the companies fully consolidated in the
Group accounts, except for consolidation of the spe-
cial purpose entity that holds the perpetual bonds,
described in note 2 "Application of IAS 32 and IAS 39
as from January 1, 2005".
29.4.2 - Foreign currency translation
Cumulative translation differences have been reset to
zero in the opening IFRS balance sheet at January 1,
2004, as allowed under IFRS 1. The impact at Janu-
ary 1, 2004 was 211 million.
Adoption of IAS 21 and IAS 29 has no impact on the
Group accounts because the foreign currency conver-
sion and translation principles applied in the French
GAAP accounts (notes 1.4 and 1.5 to the 2004 con-
solidated financial statements) comply fully with the
methods prescribed under IFRS.
29.4.3 - Property, plant and equipment and leases
Adoption of IAS 16 –
Property, Plant And Equipment
and IAS 40 – Investment Property has no impact on
the Group accounts.
Property, plant and equipment consist mainly of man-
ufacturing equipment dedicated to specific product
lines and material parts of individual items of equip-
ment are already depreciated separately in the French
GAAP accounts. Consequently, there is no need to
change the assets' carrying amount or depreciation
schedules to comply with IAS 16. In addition, the
Group does not own any investment property.
Adoption of IAS 17 –
Leases has led to the reclassifi-
cation of certain non-material leases. The impact of
these reclassifications at January 1, 2004 was 6 mil-
lion on assets and 5 million on debt.
In accordance with IFRS 5 –
Non-Current Assets
Held For Sale And Discontinued Operations
– assets
held for sale at the year-end (consisting mainly of real
estate) are reported separately, in an amount of 15
million at January 1, 2004 and 8 million at December
31, 2004.
29.4.4 - Impairment of assets
As recommended by the French securities regulator
(COB, now renamed AMF), the Group elected for
early adoption – starting in 2002 – of standard CRC
2002-10 concerning asset impairments. The method
used to test assets for impairment complies with IAS
36 –
Impairment Of Assets and the level (Cash Gen-
erating Unit) at which the recoverability of goodwill is
assessed is also compatible with this standard.
The Group's business is highly sensitive to technolog-
ical advances and property, plant and equipment are
already tested for impairment at regular intervals.
For the purpose of preparing the IFRS accounts, IAS
36 is also being applied to internally-generated intan-
gible assets corresponding to capitalized development
costs.
29.4.5 - Provisions for losses and contingencies
The transition to IFRS has no impact on provisions for
losses and contingencies because the criteria applied
in the French GAAP accounts to recognize these
items comply with IAS 37 –
Provisions, Contingent
Liabilities and Contingent Assets.
However, in the IFRS accounts, long-term provisions
for contingencies have been discounted. The dis-
counting adjustment amounted to 18 million at Jan-
uary 1, 2004 and 16 million at December 31, 2004.
The following reclassifications have been made:
Certain provisions for impairment of assets that
were previously reported as liabilities have been
reclassified as a deduction from the corresponding
assets (29 million at January 1, 2004 and 28 mil-
lion at June 30 and December 31, 2004).
Accrued liabilities related primarily to restructuring,
the environment and product warranties have been
reclassified under provisions for contingencies in the
IFRS financial statements at December 31, 2004, in
an amount of 237 million.