Financial Reporting - Rexel

Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the
carrying amount of the other assets in the unit (or group of units) on a pro rata basis.
Calculation of the Recoverable Amount
The recoverable amount of the Group’s investments in held-to-maturity securities and receivables carried at
amortized cost is calculated as the present value of estimated future cash flows, discounted at the original
effective interest rate (i.e., the effective interest rate computed at initial recognition of these financial assets)
when the effect is material.
The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a
discount rate before tax that reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable
amount is determined for the cash-generating unit to which the asset belongs. The Group performs
impairment tests of goodwill at the country level, which represents the lowest level within the entity at which
operations are monitored by management for the purpose of measuring return on investment.
Reversal of Impairment Losses
An impairment loss in respect of a held-to-maturity security or receivable carried at amortized cost is
reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring
after the impairment loss was recognized.
Impairment losses in respect of goodwill may not be reversed.
With respect to other assets, an impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss
had been recognized.
2.9 | Inventories
Inventories are mainly composed of goods held for resale. Inventories are stated at the lower of cost and net
realizable value. Cost is calculated by reference to a first-in first-out basis, including freight in costs, net of
any purchase rebates. Net realizable value is the estimated selling price at balance sheet date, less the
estimated selling expenses, taking into account technical or marketing obsolescence and risks related to
slow moving inventory.
2.10 | Financial assets
2.10.1 | Long-term investments
Long-term investments principally include investments in non-consolidated companies and other
shareholdings, deposits required for operating purposes, and loans.
Investments in non-consolidated companies and other shareholdings are classified as assets available-forsale
and measured at fair value. When fair value is not reliably measurable, investments are stated at cost
less impairment losses when necessary. Changes in fair value are recognized in equity and transferred to
profit or loss when the asset is sold or permanently impaired.
2.10.2 | Held for trading instruments
Financial instruments held for trading mainly include marketable securities and are stated at fair value, with
any resulting gain or loss recognized in profit or loss.
The fair value of financial instruments classified as held for trading is their quoted bid price at the balance
sheet date. Change in fair value is recognized in profit or loss.
2.10.3 | Trade and other accounts receivable
Trade and other accounts receivable are measured initially at fair value and subsequently measured at
amortized cost using the effective interest rate method (see note 2.13) less impairment losses.
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