Carrefour - 2017 Registration Document

5 CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements CARREFOUR | 2017 REGISTRATION DOCUMENT 227 Scope of consolidation Note 3 Accounting principles 3.1 Basis of consolidation The Consolidated Financial Statements include the financial statements of subsidiaries from the date of acquisition (the date when the Group gains control) up to the date when the Group ceases to control the subsidiary, and the Group’s equity in associates and joint ventures accounted for by the equity method. Subsidiaries (i) A subsidiary is an entity over which the Group exercises control, directly or indirectly. An entity is controlled when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group considers all facts and circumstances when assessing whether it controls an investee, such as rights resulting from contractual arrangements or substantial potential voting rights held by the Group. The profit or loss of subsidiaries acquired during the year is included in the Consolidated Financial Statements from the date when control is acquired. The profit or loss of subsidiaries sold during the year or that the Group ceases to control, is included up to the date when control ceases. Intra-group transactions and assets and liabilities are eliminated in consolidation. Profits and losses on transactions between a subsidiary and an associate or joint venture accounted for by the equity method are included in the Consolidated Financial Statements to the extent of unrelated investors’ interests in the associate or joint venture. Associates and joint ventures (ii) Entities in which the Group exercises significant influence (associates), and entities over which the Group exercises joint control and that meet the definition of a joint venture, are accounted for by the equity method, as explained in Note 7 “Investments in equity-accounted companies”. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Other investments (iii) Investments in companies where the Group does not exercise control or significant influence over financial and operating policy decisions are qualified as available-for-sale financial assets and reported under “Other non-current financial assets”. The accounting treatment of these investments is described in Note 12 “Financial assets and liabilities, finance costs and other financial income and expenses”. Business combinations Business combinations, defined as transactions where the assets acquired and liabilities assumed constitute a business, are accounted for by the purchase method. Business combinations carried out since January 1, 2010 are measured and recognised as described below, in accordance with IFRS 3 – Business Combinations (as revised in 2008). As of the acquisition date, the identifiable assets acquired and ● liabilities assumed are recognised and measured at fair value. Goodwill corresponds to the excess of (i) the sum of the ● consideration transferred (i.e., the acquisition price) and the amount of any non-controlling interest in the acquiree, over (ii) the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. It is recorded directly in the statement of financial position of the acquiree, in the latter’s functional currency, and is subsequently tested for impairment at the level of the Cash Generating Unit to which the acquiree belongs, by the method described in Note 6.3. Any gain from a bargain purchase (i.e., negative goodwill) is recognised directly in profit or loss. For business combinations on a less than 100% basis, the ● acquisition date components of non-controlling interests in the acquiree (i.e., interests that entitle their holders to a proportionate share of the acquiree’s net assets) are measured at either: fair value, such that part of the goodwill recognised at the ● time of the business combination is allocated to non-controlling interests (“full goodwill” method); or the proportionate share of the acquiree’s identifiable net ● assets, such that only the goodwill attributable to the Group is recognised (“partial goodwill” method). The method used is determined on a transaction-by-transaction basis. The provisional amounts recognised for a business combination ● may be adjusted during a measurement period that ends as soon as the Group receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable, or at the latest 12 months from the acquisition date. Adjustments during the measurement period to the fair value of the identifiable assets acquired and liabilities assumed or the consideration transferred are offset by a corresponding adjustment to goodwill, provided they result from facts and circumstances that existed as of the acquisition date. Any adjustments identified after the measurement period ends are recognised directly in profit or loss. For a business combination achieved in stages (step acquisition), ● when control is acquired the previously held equity interest is remeasured at fair value through profit or loss. In the case of a reduction in the Group’s equity interest resulting in a loss of control, the remaining interest is also remeasured at fair value through profit or loss. Transaction costs are recorded directly as an operating expense ● for the period in which they are incurred. At the IFRS transition date, the Group elected to maintain the accounting treatment for business combinations applied under previous accounting standards, in line with the option available to first-time adopters under IFRS 1 – First-time Adoption of International Financial Reporting Standards.