recognized to reduce the carrying value of the goodwill to its recoverable amount. This charge, if any, is recognized under “Goodwill impairment” in the income statement. Other Fixed Assets Other intangible assets and property, plant and equipment are tested by comparing the carrying value of each relevant group of assets (which may be an isolated asset or a cash-generating unit) with its recoverable amount. If the latter is lower than the carrying value, an impairment charge equal to the difference between these two amounts is recognized. The base and the schedule of amortization/depreciation of the assets concerned are reduced if a loss is recognized, the resulting charge being recorded as an amortization/depreciation charge under “Cost of goods sold”, or “Selling, general and administrative expenses” in the income statement depending on the nature and use of the assets concerned.
NOTE 2.7 NON CURRENT FINANCIAL ASSETS
NOTE 2.9 INVENTORIES
This item mainly comprises investments in subsidiaries and receivables relating to ﬁnancial investments in unconsolidated companies. Investments in subsidiaries are classiﬁed as available for sale securities, as required by IAS 39. They are recognized at fair value. Non-current ﬁnancial assets are tested for impairment annually on the basis of the net asset value of the related companies.
NOTE 2.8 DEFERRED INCOME TAX
Inventories of raw materials are valued at the lower of purchase cost (based on weighted-average cost, including related costs) and their net realizable value. Finished goods and works-in-progress are valued at the lower of standard industrial cost (adjusted at year end on an actual cost basis) and their net realizable value. Net realizable value is the estimated selling price in the normal course of business, less the estimated cost of completion or upgrading of the product and unavoidable selling costs. Inventory cost does not include interest expense. A write-down is recorded if the net realizable value is lower than the book value. Write-downs on inventories of spare parts and consumables are calculated by comparing book value and probable net realizable value considering a speciﬁc analysis of the rotation and obsolescence of inventory items, taking into account the utilization of items for maintenance and after-sales services activities, and changes in the range of products marketed.
NOTE 2.10 TRADE ACCOUNTS RECEIVABLE
Deferred income tax is accounted for using the liability method on temporary differences arising between the book value and tax value of assets and liabilities shown in the statement of ﬁnancial position. The same is true for tax loss carry-forwards. Deferred taxes are calculated at the future tax rates enacted or substantially enacted at the ﬁscal year closing date. For a given entity, assets and liabilities are netted where taxes are levied by the same tax authority, and where permitted by the local tax authorities. Deferred tax assets are recognized where their future utilization is deemed probable in light of expected future taxable proﬁts.
Accounts receivable are originally accounted for in the statement of ﬁnancial position at their fair value, and thereafter at their amortized cost, which generally corresponds to their nominal value. Impairment is recorded on the basis of the risk of non-collectibility of the receivable, measured on a case-by-case basis in light of how long they are overdue, the results of reminders sent out, the local payment practices, and the risks speciﬁc to each country. Sales in those countries presenting a high degree of political or economic risk are generally secured by letters of credit or bank guarantees. Owing to the very short collection delays, trade accounts receivable are not discounted.
NOTE 2.11 CASH AND CASH EQUIVALENTS