APC 2010 Annual Report Download - page 166

CONSOLIDATED FINANCIAL STATEMENTS
5NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.14 - Trade accounts receivable
Provisions for doubtful accounts are recorded when it is probable
that receivables will not be collected and the amount of the loss can
be reasonably estimated. Doubtful accounts are identifi ed and the
related provisions determined based on historical loss experience,
the age of the receivables and a detailed assessment of the individual
receivables along with the related credit risks. Once it is known with
certainty that a doubtful account will not be collected, the doubtful
account and the related provision are written off via the statement
of income.
Accounts receivable are discounted in cases where they due in over
one year and the impact of adjustment is signifi cant.
1.15 - Assets held for sale
Assets held for sale are no longer amortised or depreciated and are
recorded separately in the balance sheet under “Assets held for sale”
at the lower of amortised cost and net realisable value.
1.16 - Deferred taxes
Deferred taxes, corresponding to temporary differences between the
tax basis and reporting basis of consolidated assets and liabilities,
are recorded using the liability method. Deferred tax assets are
recognised when it is probable that they will be recovered at a
reasonably determinable date.
Future tax benefi ts arising from the utilisation of tax loss carryforwards
(including amounts available for carryforward without time limit)
are recognised only when they can reasonably be expected to be
realised.
Deferred tax assets and liabilities are not discounted. Deferred tax
assets and liabilities that concern the same unit and are expected
to reverse in the same period are netted off.
1.17 - Cash and cash equivalents
Cash and cash equivalents presented in the balance sheet consist
of cash, bank accounts, term deposits of three months or less and
marketable securities traded on offi cial exchanges. Generally, all
marketable securities are short-term, highly-liquid investments that
are readily convertible to known amounts of cash at maturity. They
notably consist of commercial paper, mutual funds and equivalents.
In light of their nature and maturities, these instruments represent
insignificant risk of changes in value and are treated as cash
equivalents.
1.18 - Schneider Electric SA shares
Schneider Electric SA shares held by the parent company or by
fully consolidated companies are measured at acquisition cost and
deducted from equity. They are held at their acquisition cost until
sold.
Gains (losses) on the sale of own shares are added (deducted) from
consolidated reserves, net of tax.
1.19 - Pensions and other employee benefit
obligations
Depending on local practices and laws, the Group’s subsidiaries
participate in pension, termination benefi t and other long-term benefi t
plans. Benefi ts paid under these plans depend on such factors
as seniority, compensation levels and payments into mandatory
retirement programs.
Defined contribution plans
Payments made under defi ned contribution plans are recorded in the
income statement, in the year of payment, and are in full settlement
of the Group’s liability.
In most countries, the Group participates in mandatory general plans,
which are accounted for as defi ned contribution plans.
Defined benefit plans
Defi ned benefi t plans are measured using the projected unit credit
method.
Expenses recognised in the statement of income are split between
operating income (for current service costs) and net fi nancial income/
(loss) (for fi nancial costs and expected return on plan assets).
The amount recognised in the balance sheet corresponds to the
present value of the obligation, adjusted for unrecognised past
service cost and net of plan assets.
Where this is an asset, the recognised asset is limited to the present
value of any economic benefi t due in the form of plan refunds or
reductions in future plan contributions.
Changes resulting from periodic adjustments to actuarial
assumptions regarding general fi nancial and business conditions
or demographics (i.e., changes in the discount rate, annual salary
increases, return on plan assets, years of service, etc.) as well as
experience adjustments are immediately recognised in the balance
sheet and as a separate component of equity in “Other reserves”.
Other commitments
Provisions are funded and expenses recognised to cover the cost
of providing health-care benefi ts for certain Group retirees in Europe
and the United States. The accounting policies applied to these plans
are similar to those used to account for defi ned benefi t pension
plans.
The Group also funds provisions for all its subsidiaries to cover
seniority-related benefi ts (primarily long service awards in its French
subsidiaries). Actuarial gains and losses on these benefi t obligations
are fully recognised in profi t or loss.
2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC164