Financial Reporting - Rexel

to each period during the lease term so as to produce a constant periodic rate of interest on the remaining
balance of the liability. The capital gains arising from the sale and leaseback of property, plant and
equipment are recognized in full upon sale when the lease qualifies as an operating lease and the
transaction is realized at fair value. They are spread on a straight-line basis over the lease term in case of a
finance lease.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as
owned assets or, when shorter, the term of the finance lease.
Payments made under operating leases are recognized in the income statement on a straight-line basis over
the term of the lease. Lease incentives received are recognized in the income statement on a straight-line
basis as an integral part of the total lease expense.
Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment.
Land is not depreciated.
The estimated useful lives are as follows:
• Commercial and office buildings 20 to 35 years
• Building improvements and operating equipment 5 to 10 years
• Transportation equipment 3 to 8 years
• Computers and hardware 3 to 5 years
The assets’ residual values, useful lives, and methods of depreciation are reviewed and adjusted if
appropriate at each balance sheet date.
2.7 | Investments in Associates
Investments in entities over which the Group has a significant influence are accounted for using the equity
method.
Interests in associates are initially carried at cost which includes transaction costs.
The consolidated financial statements include the Group’s share in the results of operations and other
components of the comprehensive income, after taking into account adjustments for homogenization with the
Group’s accounting policies.
When the Group’s share in the losses is greater than the value of their interest in the associate, the carrying
amount is reduced to zero and the Group ceases to account for its share in future losses, unless the Group
has an obligation to share in the losses.
2.8 | Impairment
The carrying amounts of the Group’s assets, other than inventories (see note 2.9), trade, and other accounts
receivable (see note 2.10.3), and deferred tax assets (see note 2.20), are reviewed at each balance sheet
date to determine whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated (see below).
The recoverable amount of intangible assets that have an indefinite useful life and of intangible assets that
are not yet available for use is estimated annually or as soon as there is an indication of impairment.
Goodwill is not amortized but subject to an impairment test, as soon as there is an indication that it may be
impaired, and at least once a year. Indications that goodwill may be impaired include material adverse
changes of a lasting nature affecting the economic environment or the assumptions and objectives made at
the time of acquisition.
An impairment loss is recognized whenever the carrying amount of an asset or of its cash-generating unit
exceeds its recoverable amount. Impairment losses are recognized in the income statement (in “Other
expenses”).
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