CFM INDOSUEZ Wealth Management - 2019 annual report

income, unrealised gains and losses are offset against equity. As a result, the tax expense or the actual tax saving borne by the entity on these unrealised gains or losses is reclassified as a deduction from them. For leases recorded under IFRS 16 where the Group is lessee, a deferred tax liability is recognised for the right to use the asset and a deferred tax asset is recorded for the lease liability. Current and deferred taxes are recognised in net income for the year unless the tax is generated: • by a transaction or event that is recognised directly in other comprehensive income, in the same year or in a different year, in which case it is directly debited from or credited to other comprehensive income; • or from a business combination. Deferred tax assets and liabilities are offset if, and only if: • the entity has a legally enforceable right to offset current tax assets and liabilities; • deferred tax assets and liabilities relate to income taxes levied by the same tax authority: a) either on the same taxable entity, b) or on different taxable entities that intend to either settle the current tax liabilities and assets on a net basis or realise the assets and settle the liabilities concurrently in each of the following years in which it is expected that significant amounts of deferred tax assets or liabilities will be settled or recovered. Treatment of non-current assets (IAS 16, 36, 38 and 40) CFM Indosuez Wealth Group applies the asset component accounting method to all of its property, plant and equipment. In accordance with the provisions of IAS 16, the depreciable base takes into account any residual value of non-current assets. Land is recorded at acquisition cost, less any impairment. Operating and investment properties and their fittings and fixtures are recorded at acquisition cost less depreciation and impairment since they entered service. Purchased software is recognised at acquisition cost less depreciation and impairment recorded since the date of acquisition. Created software is recognised at cost of production less depreciation and impairment recorded since the date of completion. In addition to software, intangible non-current assets mainly include assets acquired in business combinations resulting from contractual rights (e.g. distribution agreements). These have been valued according to their future economic benefits or the potential of the expected services. Non-current assets are amortised according to their estimated useful lives. CFM Indosuez Wealth Group uses the following depreciation components and periods under the component accounting approach. It should be noted that these depreciation and amortisation periods are adapted to the nature of the buildings and their location: Component Depreciation/ Amortisation period Buildings 30 to 50 years Fixtures & fittings 6 to 10 years Furniture & equipment 5 to 10 years Transportation equipment 5 years IT equipment 3 years Software and other intangible non-current assets 1 to 3 years Based on the information available to CFM Indosuez Wealth on the value of its amortisable assets, it has concluded that impairment tests would not result in changes in the values entered in the balance sheet. Foreign currency transactions (IAS 21) Assets and liabilities denominated in foreign currencies are translated into CFM Indosuez Wealth’s operating currency, the euro, on the balance sheet date. In accordance with IAS 21, a distinction is made between monetary and non-monetary items. Monetary assets and liabilities in foreign currencies are translated at the closing rate. Foreign exchange differences resulting from this translation are recognised in the income statement. This rule has three exceptions: - for debt instruments measured at fair value through other comprehensive income, the translation difference calculated on the amortised cost is recognised in income; the balance is recorded in other comprehensive income recyclable to income; - foreign exchange differences on items classified as cash flow hedges or as part of a net investment in a foreign operation are recognised in other comprehensive income recyclable to income; - for financial liabilities designated at fair value through profit or loss, the foreign exchange differences related to changes in the fair value of own credit risk are recorded in other comprehensive income not recyclable to income. The accounting treatment of non-monetary items differs according to the accounting treatment applied before their conversion: - items recorded at historical cost continue to be valued at the exchange rate on the transaction date (historical rate); - fair value items are converted at the exchange rate at the reporting date. Foreign exchange differences on non-monetary items are recognised: - in the income statement, if the gain or loss on the non- monetary item is recorded in the income statement; - in other comprehensive income not recyclable to income if the gain or loss on the non-monetary item is recorded in other comprehensive income not recyclable to income. Revenue from Contracts with Customers (IFRS 15) Commission income and expenses are recorded in the income statement according to the type of services to which they relate. Commissions that are integral to the performance of a financial instrument are accounted for as an adjustment to the compensation of such instrument.For other types of commissions, their recognition in the income statement must reflect the rate at which control over the good or service sold is transferred to the client: • the result of a transaction associated with the provision of services is recognised under “Commissions” when transferring control of the service to the client if it can be reliably estimated. This transfer may occur as the service is rendered (ongoing service) or on a given date (one-time service); • Fees for ongoing services (means of payment fees, for example) are recorded in the income statement according to the degree of progress of the service rendered; • Fees received or paid for one-time services are, in turn, fully recognised in profit or loss when the service is rendered. Commissions payable or receivable subject to the achievement of a performance obligation are recognised at the amount for 69 Annual Financial Statements 2019