Carrefour - 2017 Registration Document

5 CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements CARREFOUR | 2017 REGISTRATION DOCUMENT 243 Property and equipment 6.2 Accounting principles Property and equipment mainly comprise buildings, store fixtures and fittings and land. Initial recognition In accordance with IAS 16 – Property, Plant and Equipment, land, buildings and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the asset. Qualifying assets are defined in IAS 23 – Borrowing Costs as assets that necessarily take a substantial period of time to get ready for their intended use or sale, corresponding in the Group’s case to investment properties, hypermarkets and supermarkets for which the construction period exceeds one year. Assets under construction are recognised at cost less any identified impairment losses. Useful lives Depreciation of property and equipment begins when the asset is available for use and ends when the asset is sold, scrapped or reclassified as held for sale in accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations. Land is not depreciated. Other property and equipment, or each significant part of an item of property or equipment, are depreciated by the straight-line method over the following estimated useful lives: Buildings Buildings ● 40 years Site improvements ● 10 to 20 years Car parks ● 6 to 10 years Equipment, fixtures and fittings 4 to 8 years Other 3 to 10 years In light of the nature of its business, the Group considers that its property and equipment have no residual value. Depreciation periods are reviewed at each year-end and, where appropriate, adjusted prospectively in accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors. Leases New long-term leases – particularly property leases – are analysed in accordance with IAS 17 – Leases to determine whether they represent finance leases, i.e., leases that transfer substantially all the risks and rewards incidental to ownership of the asset to the lessee, or operating leases. For property leases, the analysis is performed separately for the land on the one hand and the building on the other. Finance leases are accounted for as follows: The leased assets are recognised in the statement of financial ● position at fair value or, if lower, the present value of the minimum lease payments. They are depreciated over their useful life, in the same way as assets owned outright, or, if shorter, over the lease term; The liability for the future lease payments is recognised in the ● statement of financial position under “Long-term borrowings” and “Short-term borrowings” (Note 12.2.1); Lease payments are apportioned between the finance charge ● and the reduction of the outstanding liability. Leases that do not transfer substantially all the risks and rewards incidental to ownership of the asset to the lessee are classified as operating leases. Operating lease payments are recognised in the income statement (under “recurring operating expenses”) on a straight-line basis over the life of the lease (Note 5.2.2).