APC 2012 Annual Report Download - page 177

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 175
CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER31, 2012
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.15 – Assets held for sale
Assets held for sale are no longer amortized or depreciated and
are recorded separately in the balance sheet under “Assets held
for sale” at the lowest of its amortized cost or net realizable value.
1.16 – Deferred taxes
Deferred taxes, related to temporary differences between the tax
basis and accounting basis of consolidated assets and liabilities,
are recorded using the balance sheet liability method. Deferred tax
assets are recognized when it is probable that they will be recovered
at a reasonably determinable date.
Future tax benefi ts arising from the utilization of tax loss carry
forwards (including amounts available for carry forward without time
limit) are recognized only when they can reasonably be expected
to berealized.
Deferred tax assets and liabilities are not discounted. Deferred tax
assets and liabilities related to the same unit and which are expected
to reverse in the same period of time 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 organized markets. 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 insignifi cant
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 factors
such 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 recognized 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 recognized in the balance sheet corresponds to the
present value of the obligation, adjusted for unrecognized past
service cost and net of plan assets.
Where this is an asset, the recognized 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 recognized in the balance
sheet as a separate component of equity in “Other reserves” and in
comprehensive income as other comprehensive income/loss.
Other commitments
Provisions are funded and expenses recognized 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 for its
French subsidiaries). Actuarial gains and losses on these benefi t
obligations are fully recognized in profi t or loss.
1.20 – Share-based payments
The Group grants different types of share-based payments to senior
executives and certain employees. These include:
•Schneider ElectricSA stock options;
•stock grants;
•stock appreciation rights, based on the Schneider Electric SA
stock price.