CFE - 2006 annual report - Vinci

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T. Trade and other payables
Trade and other payables are stated at cost.
U. Income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the income state-
ment except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
Current tax is the expected tax payable on the taxable income for the year and any adjustment to tax payable in respect of
previous years. It is calculated using tax rates enacted at the balance sheet date.
Deferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets and
liabilities and their carrying values. Currently or substantially enacted tax rates are used to determine deferred income tax.
Under this method the company is required to make a provision for deferred income tax on the difference between the fair
values of the net assets acquired and their tax base as a result of a business combination.
The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to
the extent that they will probably not reverse in the foreseeable future.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilized. A deferred tax asset is reduced to the extent that it is no longer probable that the related tax
benefit will be realized.
V. Revenue
1. Revenue from construction contracts
Revenue of the contract should include the initial amount of revenue defined in the contract and the modifications in the work
specified by the contract, claims & performance bonuses when it is probable that these will generate products and when it
can be reliably measured.
Revenue of the contract is calculated at the fair value of the counterpart received or to be received.
A modification can lead to an increase or a decrease of contract revenue. A modification is an instruction given by the client
in order to change the scope of the work to be realized according to the contract. A modification is included in the contract
revenue when it is probable that the client will approve the modification as well as the amount of revenue resulting from this
modification and that the amount can be reliably measured.
Performance bonuses form part of the contract revenue when the completion of contract is so that it is probable that the speci-
fied performance will be reached or overtaken and that the amount of the performance bonus can be reliably measured.
Contract revenue is recognized according to the level of completion of the activity of the contract at the closing date (according
to the percentage of completion).
An expected loss on the construction contract is immediately recognized.
2. Goods sold and services rendered
In relation to the sale of goods and property items, revenue is recognized when the significant risks and rewards of owner-
ship have been transferred to the buyer, and no significant uncertainties remain regarding recovery of the consideration due,
associated costs or the possible return of goods.
C F E F I N A N C I A L R E P O R T 2 0 0 6 I 1 2 6 t h C F E F I N A N C I A L R E P O R T 2 0 0 6 I c o r p o r a t e f i n a n c i a l y e a r
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