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FINANCIAL INFORMATION
4.2 Consolidated financial statements
4
204
Registration Document 2016 — Capgemini
Financial instruments
Note 17
Financial instruments consist of:
financial assets, including other non-current assets, accounts
◗
receivable, other current assets, cash management assets
and cash and cash equivalents;
and bank overdrafts, accounts payable, and other current
payables and non-current liabilities;
financial liabilities, including long- and short-term borrowings
derivative instruments.
◗
Recognition of financial instruments
a)
recognized in the Consolidated Statement of Financial Position
at their initial fair value.
Financial instruments (assets and liabilities) are initially
The subsequent measurement of financial assets and liabilities
is based on either fair value or amortized costs depending on
their classification in the Consolidated Statement of Financial
Position.
The fair value of a financial instrument is the amount for which
an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.
Amortized cost corresponds to the initial carrying amount (net
of transaction costs), plus interest calculated using the effective
applicable). Accrued interest (income and expense) is not
recorded on the basis of the financial instrument’s nominal
interest rate, less cash outflows (coupon interest payments and
repayments of principal and redemption premiums where
impairment tests as soon as there are indicators of a loss in
value. Any loss in value is recognized in the Income Statement.
interest rate, but on the basis of its effective interest rate.
Financial assets measured at amortized cost are subject to
definitions:
Financial instruments are recognized at inception and on
subsequent dates in accordance with the methods described
below. These methods draw on the following interest rate
interest rate on borrowings;
the coupon interest rate or coupon, which is the nominal
◗
the effective interest rate, which is the rate that exactly
◗
to the net carrying amount of the financial asset or liability at
initial recognition. The effective interest rate takes into account
discounts the estimated cash flows through the expected
term of the instrument, or, where appropriate, a shorter period
applicable, premiums to be paid and received;
all fees paid or received, transaction costs, and, where
the market interest rate, which reflects the effective interest
rate recalculated at the measurement date based on current
market parameters.
Financial instruments (assets and liabilities) are derecognized
when the related risks and rewards of ownership have been
transferred, and when the Group no longer exercises control
over the instruments.
Derivative instruments
b)
where applicable), interest rate swaps and call options on own
shares.
Derivative instruments mainly comprise forward foreign
exchange purchase and sale contracts (in the form of tunnels,
Other derivative instruments
Except as described below in the case of instruments
designated as cash flow hedges, changes in the fair value of
Other derivative instruments are initially recognized at fair value.
derivative instruments, estimated based on market rates or data
provided by bank counterparties, are recognized in the Income
Statement at the period end.
recognized firstly in “Income and expense recognized in equity”
and subsequently taken to operating profit when the hedged
When operating or financial cash flow hedges are eligible for
hedge accounting, the fair value of the hedging instruments are
item itself impacts the Income Statement.
Fair value measurement
c)
Fair value measurement methods for financial and non-financial
assets and liabilities as defined above are classified according
to the following three fair value levels:
Level 1: fair value measured based on quoted prices
◗
(unadjusted) observed in active markets for identical assets or
liabilities;
prices in active markets, that are observable either directly (
i.e.
as prices) or indirectly (
i.e.
derived from prices);
Level 2: fair value measured using inputs other than quoted
◗
inputs).
Level 3: fair value of assets or liabilities measured using inputs
◗
that are not based on observable market data (unobservable
As far as possible, the Group applies Level 1 measurement
methods.