Carrefour - 2017 Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Notes to the Consolidated Financial Statements 2017 REGISTRATION DOCUMENT | CARREFOUR 5. 268 Financial assets and liabilities, finance costs and other financial income and Note 12 expenses Accounting principles Non-derivative financial assets In accordance with IAS 39 – Financial Instruments: Recognition and Measurement, the main financial assets are classified in one of the following four categories: financial assets at fair value through profit or loss; ● loans and receivables; ● held-to-maturity investments; ● available-for-sale financial assets. ● Their classification determines their accounting treatment. They are classified by the Group upon initial recognition, based on the type of asset and the purpose for which it was acquired. Purchases and sales of financial assets are recognised on the trade date, defined as the date on which the Group is committed to buying or selling the asset. Financial assets at fair value through profit or loss (i) These are financial assets held for trading, i.e., assets acquired principally for the purpose of selling them at a profit in the short term, or financial assets designated at the outset as at fair value through profit or loss. They are measured at fair value with changes in fair value recognised in the income statement, under financial income or expense. Loans and receivables (ii) Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and that do not meet the criteria for classification as either held for trading or available for sale. They are initially recognised at fair value and are subsequently measured at amortised cost by the effective interest method. For short-term receivables with no specified interest rate, fair value is considered to be equal to the original invoice amount. These assets are tested for impairment when there is an indication that their recoverable amount may be less than their carrying amount. If this is found to be the case, an impairment loss is recorded. This category includes trade receivables, other loans and receivables (reported under “Other financial assets”) and consumer credit granted by the financial services companies. Held-to-maturity investments (iii) Held-to-maturity investments are non-derivative financial assets other than loans and receivables with fixed or determinable payments and a fixed maturity that the Group has the positive intention and ability to hold to maturity. They are initially recognised at fair value and are subsequently measured at amortised cost by the effective interest method. The Group did not hold any assets classified as held-to-maturity at December 31, 2017 or December 31, 2016. Available-for-sale financial assets (iv) Available-for-sale financial assets are financial assets that do not meet the criteria for classification in any of the other three categories. They consist mainly of shares in non-consolidated companies. Available-for-sale financial assets are measured at fair value, with changes in fair value recognised in “Other comprehensive income”, under “Changes in the fair value of available-for-sale financial assets”. When the assets are sold, the gains and losses accumulated in shareholders’ equity are reclassified to the income statement. However, in the event of a prolonged or significant fall in value of an equity instrument or a decline in estimated cash flows from a debt instrument, an impairment loss is recognised in the income statement. If, in a subsequent period, the impairment decreases, the previously recognised impairment loss is released as follows: for equity instruments (shares and other): through “Other ● comprehensive income”; for debt instruments (bonds, notes and other): where an ● increase is observed in estimated future cash flows, through profit or loss for an amount not exceeding the previously recognised impairment loss. The fair value of listed securities corresponds to their market price. For unlisted securities, fair value is determined by reference to recent transactions or by using valuation techniques based on reliable and observable market data. When it is impossible to obtain a reasonable estimate of an asset’s fair value, it is measured at historical cost. Non-derivative financial assets held by the Group The main non-derivative financial assets held by the Group are as follows: non-current financial assets, mainly comprising investments in ● non-consolidated companies and long-term loans; trade receivables (Note 5.4.3); ● consumer credit granted by the financial services companies ● (Note 5.5.1); other current financial assets, mainly available-for-sale financial ● assets, measured at fair value, and short-term loans and deposits.