Ubisoft 2001 Annual Report Download - page 47

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FINANCIAL REPORT
Consolidated accounts
47
Any brands acquired are entered at their acquisition cost. In
the case of brands which are created, the cost of registering
them is immobilized.
Brands are reviewed for each set of Annual Accounts in the
light of changes in the potential sales they generate, and may
be subject to exceptional amortization or write-down.
c) Intangible assets
Intangible assets include the business assets, trademarks,
and office and commercial software.
Distribution trademarks are not amortized.
Office software is amortized using the straight-line method
over a twelve-month period.
Software production costs are determined in accordance
with the guidelines issued by the Conseil National de la
Comptabilité [French National Accountancy Council] in April
1987. These costs are entered in the accounts under
“intangible assets” (account no. 232) as software develop-
ment in progress. From the date of their first commercial
release they are transferred to “Released softwares” or
“External developments” (account no. 208).
Parent software programs are amortized with effect from
their commercial release date on the basis of the expected
market life of the product concerned, as assessed at the
account closing date.
The amortization period is between 12 and a maximum of 36
months. Net sales of the various products until the end of
their market life are estimated at K742,652 (they came
to K643,526 on March 31, 2001).
This sum allows the corresponding parent software programs
to be amortized. The system of amortization used is the
straight-line method. However, if sales are less than estima-
ted, a supplementary amortization will be carried out.
Software tools, which are a set of complex development pro-
grams that may be used for a number of products, are amor-
tized over a maximum of 36 months using the straight-line
method.
d) Tangible fixed assets
Fixed assets are shown in the Balance Sheet at their acqui-
sition cost.
Depreciation, which is calculated using rates standardized
throughout the Group, is determined on the basis of the
methods and periods of use set out below:
■Equipment: 5 years (straight-line).
■Fixtures and fittings: 5 and 10 years (straight-line);
■Computer equipment: 3 years (diminishing balance);
■Office furniture: 10 years (straight-line).
e) Financial fixed assets
The gross value of equity holdings corresponds to the cost
of acquisition or the payment in cash for the shares of non-
consolidated companies.
The value of an equity holding is reviewed at the end of each
financial year on the basis of the net position of the subsi-
diary concerned on that date and its prospects for growth
over the medium term. A provision for depreciation is made
if necessary.
f) Fixed assets acquired through leasing arrangements
Significant capital assets which are financed by leasing
agreements are restated in the Consolidated Accounts as if
the Company had acquired the assets directly using loan
finance.
g) Inventory and work-in-progress
The inventories of all Group companies are valued, after
eliminating internal margins, on the basis of the cost prices
determined in normal trading.
Inventory is valued using the moving-average method. The
gross value of goods and supplies includes the purchase
price and related expenses. Financial costs are excluded
from inventory valuation in all cases.
A provision for depreciation is made where the probable
net realizable value is less than the book
h. Advances and installments received
Licenses cover distribution and reproduction rights acquired
from other publishers. The signing of licensing contracts
entails the payment of guaranteed amounts, recorded in
account no. 409.
At year end, the amonts remaning to be amortized are com-
pared with sales projections. In case the sales are not suf-
ficient a supplementary amortization will be undertaken.
i) Trade receivables
Trade receivables are entered at their face value. Where
applicable, a provision for depreciation may be entered
according to the degree of certainty as to ultimate collec-
tion existing at the account closing date.
j) Investment securities
Investment securities consist of equity shares, investment
securities and short-term investments, which are booked at
their purchase price or, whenever it is lower, their market price.