CFM INDOSUEZ Wealth Management - 2020 Annual Report

72 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) on the same taxable entity, b) or one 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 IndosuezWealthGroup 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 Basedon the informationavailable toCFMIndosuezWealth 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 ismade between monetary and non-monetary items. Monetary assets and liabilities in foreign currencies are translated at the closing rate. Foreign exchange differences resulting fromthis 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 inother 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 at fair value through profit or loss as an option, the exchange differences related to changes in the fair value of own credit risk is recorded in non-recyclable equity. The accounting treatment of non-monetary items differs according to the accounting treatment applied before their conversion: - items recorded at historical cost continue tobe valued at the exchange rate on the day of the transaction (historical rate); - fair value items are converted at the exchange at the reporting date.