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4.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 9. Intangible assets

DANONE

REGISTRATION DOCUMENT 2015

114

Note 8.3. Tax loss carryforwards

Accounting principles

Deferred tax assets relating to tax loss carryforwards and temporary

differences are recognized in the consolidated balance sheet when

it is more likely than not that these taxes will be recovered. At each

closing, the Group reviews the unused tax losses and the amount

of deferred tax assets recognized on the balance sheet. In some

countries in which losses can be carried forward indefinitely, the

Group takes into consideration long-term recovery horizons when

justified in light of forecast taxable profits.

Carrying amount

As of December 31

(in € millions)

2014

2015

Tax losses – recognized portion

Recognized tax loss carryforwards

(a) (b)

1,630

1,569

Tax savings

(c)

533

516

Tax losses – unrecognized portion

Tax loss carryforwards and tax credits not yet used

(a)

403

480

Potential tax savings

107

130

(a) Basis amount.

(b) In 2015, they mainly come from the French consolidated tax group. The decrease relative to 2014 wasmainly due to impairment of tax assets related to Dumex.

(c) Corresponds to deferred tax assets based on tax loss carryforwards.

Consumption horizon

Most of the tax losses as of December 31, 2015 can be carried forward indefinitely and have a probable consumption horizon of more

than five years.

NOTE 9. INTANGIBLE ASSETS

Note 9.1. Accounting principles

Goodwill

When control of a company is acquired, the fair value of the consi-

deration given to the seller is allocated to the acquired identified

assets and the liabilities and contingent liabilities assumed, which

are measured at fair value. The difference between the considera-

tion given to the seller and the Group's share of the fair value of the

acquired identified assets and the liabilities and contingent liabili-

ties assumed represents goodwill. When the option of recognizing

non-controlling interests at fair value is applied, a corresponding

premium is allocated to goodwill. Goodwill is recognized in the

consolidated balance sheet as an asset under the heading Goodwill.

Goodwill arising from the acquisition of a foreign entity is recognized

in the functional currency of the entity acquired and translated at

the exchange rates prevailing on the closing date.

Goodwill is not amortized but is tested for impairment at least annually.

For the purposes of impairment testing, goodwill is allocated to

the Cash generating units (CGU) or groups of CGUs most likely

to benefit from the synergies of the business combination and to

the lowest level at which goodwill is monitored by the Group. The

CGUs correspond to subsidiaries or groups of subsidiaries that are

included in the same Division and that generate cash flows largely

independent from those generated by other CGUs.

Brands with indefinite useful lives

Acquired brands that are distinguishable, having a significant value,

are supported by advertising expense and have indefinite useful lives

are recorded under the heading Brands in the consolidated balance

sheet. The valuation of these brands is generally determined with

the assistance of valuation specialists, taking into account various

factors, including brand awareness and their contribution to ear-

nings. These brands, which are legally protected, are not amortized

but are tested for impairment annually or more frequently if signs

of impairment exist (see hereafter).