Financial Reporting - Rexel
Financial Reporting - Rexel
Financial Reporting - Rexel
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indication that the cash-generating unit may be impaired (the impairment testing policy is described in note<br />
2.8).<br />
When goodwill is allocated to a cash-generating unit (or group of cash-generating units) and part of the<br />
operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in<br />
the carrying amount of the operation when determining the gain or loss on disposal of the operation.<br />
Goodwill disposed of in this circumstance is measured based on the relative values of the operation<br />
disposed of and the portion of the cash-generating unit retained.<br />
Other Intangible Assets<br />
Intangible assets other than goodwill are stated at cost less accumulated amortization (see below) and<br />
impairment losses (see note 2.8).<br />
Identifiable intangible assets existing at the date of acquisition in a business combination are recognized as<br />
part of the purchase accounting and measured at fair value. Intangible assets are considered identifiable if<br />
they arise from contractual or legal rights or are separable.<br />
Strategic partnerships acquired in business combinations arise from contractual rights. Their valuation is<br />
determined on the basis of a discounted cash flow model.<br />
Distribution networks are considered separable assets as they could be franchised. They correspond to the<br />
value added to each branch through the existence of a network, and include notably banners and<br />
catalogues. Their measurement is performed using the royalty relief method based on royalty rates used for<br />
franchise contracts, taking their profitability into account. The royalty rate ranges from 0.4% to 0.8% of sales<br />
depending on each country.<br />
Strategic partnerships and distribution networks are regarded as having an indefinite useful life when there is<br />
no foreseeable limit to the period over which they are expected to generate net cash inflows for the Group.<br />
They are not amortized and are tested for impairment annually or as soon as there is an indication that these<br />
assets may be impaired.<br />
Customer relationships are recognized when the acquired entity establishes relationships with key customers<br />
through contracts. Customer relationships are measured using an excess profit method and are amortized<br />
over their useful lives based on historical attrition.<br />
Computer software purchased for routine processing operations is recognized as an intangible asset.<br />
Internally developed software which enhances productivity is capitalized.<br />
Amortization<br />
Amortization is charged to profit or loss on a straight-line basis over the estimated useful lives of intangible<br />
assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite useful life are tested<br />
for impairment at each annual balance sheet date, at least. The useful life of an intangible asset with an<br />
indefinite useful life is reviewed annually to determine whether the assessment of indefinite useful life for this<br />
asset continues to be justified. If not, a change in the useful life assessment from indefinite to finite is made<br />
on a prospective basis. Other intangible assets are amortized from the date that they are available for use.<br />
Estimated useful lives of capitalized software development costs range from 5 to 10 years.<br />
2.6 | Property, Plant and Equipment<br />
Owned Assets<br />
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and<br />
impairment losses (see note 2.8).<br />
When parts of an item of property, plant and equipment have different useful lives, those components are<br />
accounted for as separate items of property, plant and equipment.<br />
Leased Assets<br />
Lease contracts which substantially transfer to the Group all of the risks and rewards of ownership are<br />
classified as finance leases. All other leases are classified as operating leases.<br />
Assets held under finance leases are stated at an amount equal to the fair value of the leased property or, if<br />
this is lower, the present value of the minimum lease payments at inception of the lease, less accumulated<br />
depreciation (see below) and impairment losses (see note 2.8). Minimum lease payments are apportioned<br />
between the finance expense and the reduction of the outstanding liability. The finance expense is allocated<br />
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