CFM INDOSUEZ Wealth Management - 2020 Annual Report

74 The right to use the leased asset is calculated using the initial value of the lease liability plus any direct initial costs, advance considerations and the cost of restoring the asset. It is amortised over the estimated termof the lease. The lease liability and the right-of-use asset may be adjusted if the lease agreement is amended, if the lease term is re-estimated or if the lease payments are revised due to the application of indices or rates. The lessee records deferred taxes for temporary differences between the right-of-use asset and the lease liability. Under the exception included in the standard, short-term leases (with an initial term of less than twelve months) and leases for low-value assets are not recorded in the balance sheet – the corresponding lease expenses are recognised on a straight-line basis as operating expenses in the income statement. In accordance with the provisions of the standard, the Group does not apply IFRS 16 to lease agreements for intangible assets. 1.3 CONSOLIDATION PRINCIPLES AND METHODS (IFRS 10, IFRS 11 AND IAS 28) Consolidation methods The consolidation methods are established by IFRS 10 and IAS 28, as amended, respectively. They are based on the nature of the control exercised by CFM Indosuez Wealth over entities within the scope of consolidation, regardless of their activity and whether or not they have legal status: • full consolidation for controlled entities, including entities with different account structures, even if their activity is not in line with that of CFM Indosuez Wealth; • the equity method, for entities under significant influence and under joint control. Full consolidation consists of replacing the value of the securities with all of the subsidiary ’s asset and liability items. The share of non-controlling interests in equity and in income is indicated separately in the consolidated balance sheet and income statement. The equitymethod consists of replacing the value of the securities with the Group's share of equity and the profit or loss of the companies concerned. Since the two consolidated subsidiaries were created by the CFM IndosuezWealth, no goodwill was recognised. Consolidation adjustments and eliminations Consolidation adjustments are made to ensure the consistency of the valuation methods applied by consolidated companies. The impact on theconsolidatedbalance sheet and income statement of internal Group operations is eliminated for fully consolidated entities. Capital gains or losses from asset sales between consolidated companies are eliminated; any permanent impairment recordedonan internal transfer is recognised.