Ubisoft 2007 Annual Report Download - page 102

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UBISOFT • FINANCIAL REPORT 2008
Property, plant and equipment
Items of property, plant and equipment are recognized at
their historical cost. The following depreciation rates are
used:
Equipment: 5 years (straight-line)
Fixtures and fittings: 5 and 10 years (straight-line)
Computer hardware: 3 years (straight-line)
Office furniture: 10 years (straight-line)
Non-current financial assets
Equity investments are measured at their historical cost,
including all related acquisition costs.
The recoverable amount of the investment is reviewed at
the end of each fiscal year based on the net assets of the
subsidiary in question at that date, the market capitaliza-
tion at the balance sheet date if the company is listed,
and/or on its medium-term earnings outlook. A provision
for depreciation is recognized if necessary.
Own shares held is valued at the lower of cost or market
value.
Deposits and sureties are recognized on the basis of the
amounts paid.
Advances and prepayments made
Advances and prepayments primarily involve distribution
and reproduction rights (licenses) acquired from other
software publishers. The signing of licensing agreements
gives rise to the payment of guaranteed amounts, the net
amounts of which are recognized in account 409 (under
French Conseil d’Etat rules 62547 of February 12, 1988,
and 65009 of November 25, 1989).
These advances and prepayments are recognized in the
income statement on the basis of the agreements signed
with software publishers (either by the unit or based on
gross profit or on revenue) or, in the case of flat fees, on
a straight-line basis.
At the end of the fiscal year, the carrying amount is com-
pared to sales projections on the basis of the terms and
conditions of the agreement. Depreciation is recognized if
they are insufficient.
Trade receivables
Trade receivables are carried at their nominal amount.
Where applicable, a provision for depreciation is recorded
based on the likelihood of their collection at the balance
sheet date.
Investment securities
Investment securities consist of interests in mutual funds
and short-term investments, and are measured at the
lower of cost or market value.
Translation of liabilities and receivables
denominated in foreign currencies
Liabilities and receivables denominated in foreign curren-
cies were translated at the applicable rates on March 31,
2008. Any resulting translation gains or losses are recog-
nized in the balance sheet under a specific heading. A pro-
vision for foreign exchange risk is recorded if translation
reveals the existence of unrealized losses.
Foreign exchange hedges
As hedges are not allocated to specific transactions,
Ubisoft Entertainment SA has chosen not to use hedge
accounting for the instruments it uses to hedge its foreign
exchange risk.
Provisions for risks and charges
Provisions for risks and charges are recognized where risks
and charges that have a clearly defined object, but that are
not certain to arise, are made likely by events that have
occurred or are in progress.
As of March 31, 2008, provisions for risks and charges
pertained solely to the foreign exchange risk stemming
from the discounting of receivables and liabilities denomi-
nated in foreign currencies.