2018 Registration document and annual fi nancial report - BNP PARIBAS174

4 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

4

Notes to the fi nancial statements

Depreciable property, plant and equipment and intangible assets are tested for impairment if there is an indication of potential impairment at the balance sheet date. Non-depreciable assets are tested for impairment at least annually, using the same method as for goodwill allocated to cash-generating units.

If there is an indication of impairment, the new recoverable amount of the asset is compared with the carrying amount. If the asset is found to be impaired, an impairment loss is recognised in the profi t and loss account. This loss is reversed in the event of a change in the estimated recoverable amount or if there is no longer an indication of impairment. Impairment losses are taken to the profi t and loss account in Depreciation, amortisation and impairment of property, plant and equipment and intangible assets .

Gains and losses on disposals of property, plant and equipment and intangible assets used in operations are recognised in the profi t and loss account in Net gain on non-current assets .

Gains and losses on disposals of investment property are recognised in the profi t and loss account in Income from other activities or Expense on other activities .

1.h LEASES Group companies may either be the lessee or the lessor in a lease agreement.

1.h.1 Group company as lessor

Leases contracted by the Group as lessor are categorised as either fi nance leases or operating leases.

Finance leases In a fi nance lease, the lessor transfers substantially all the risks and rewards of ownership of an asset to the lessee. It is treated as a loan made to the lessee to fi nance the purchase of the asset.

The present value of the lease payments, plus any residual value, is recognised as a receivable. The net income earned from the lease by the lessor is equal to the amount of interest on the loan, and is taken to the profi t and loss account under Interest income . The lease payments are spread over the lease term, and are allocated to reduction of the principal and to interest such that the net income refl ects a constant rate of return on the net investment outstanding in the lease. The rate of interest used is the rate implicit in the lease.

Impairments of lease receivables are determined using the same principles as applied to fi nancial assets measured at amortised cost.

Operating leases An operating lease is a lease under which substantially all the risks and rewards of ownership of an asset are not transferred to the lessee.

The asset is recognised under property, plant and equipment in the lessor s balance sheet and depreciated on a straight-line basis over its useful life. The depreciable amount excludes the residual value of the asset. The lease payments are taken to the profi t and loss account in full on a straight-line basis over the lease term. Lease payments and depreciation expenses are taken to the profi t and loss account under Income from other activities and Expense on other activities .

1.h.2 Group company as lessee

Leases contracted by the Group as lessee are categorised as either fi nance leases or operating leases.

Finance leases A fi nance lease is treated as an acquisition of an asset by the lessee, fi nanced by a loan. The leased asset is recognised in the balance sheet of the lessee at the lower of its fair value or the present value of the minimum lease payments calculated at the interest rate implicit in the lease. A matching liability, equal to the fair value of the leased asset or the present value of the minimum lease payments, is also recognised in the balance sheet of the lessee. The asset is depreciated using the same method as that applied to owned assets, after deducting the residual value from the amount initially recognised, over the useful life of the asset. If there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life. The lease obligation is accounted for at amortised cost.

Operating leases The asset is not recognised in the balance sheet of the lessee. Lease payments made under operating leases are taken to the profi t and loss account of the lessee on a straight-line basis over the lease term.

1.i NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

Where the Group decides to sell non-current assets or a group of assets and liabilities and it is highly probable that the sale will occur within 12 months, these assets are shown separately in the balance sheet, on the line Non-current assets held for sale . Any liabilities associated with these assets are also shown separately in the balance sheet, on the line Liabilities associated with non-current assets held for sale . When the Group is committed to a sale plan involving loss of control of a subsidiary and the sale is highly probable within 12 months, all the assets and liabilities of that subsidiary are classifi ed as held for sale.

Once classifi ed in this category, non-current assets and the group of assets and liabilities are measured at the lower of carrying amount or fair value less costs to sell.

Such assets are no longer depreciated. If an asset or group of assets and liabilities becomes impaired, an impairment loss is recognised in the profi t and loss account. Impairment losses may be reversed.

Where a group of assets and liabilities held for sale represents a cash generating unit, it is categorised as a discontinued operation . Discontinued operations include operations that are held for sale, operations that have been shut down, and subsidiaries acquired exclusively with a view to resell.

In this case, gains and losses related to discontinued operations are shown separately in the profi t and loss account, on the line Post-tax gain/loss on discontinued operations and assets held for sale . This line includes the post-tax profi ts or losses of discontinued operations, the post-tax gain or loss arising from remeasurement at fair value less costs to sell, and the post-tax gain or loss on disposal of the operation.