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ANNUAL REPORT 2014/2015
NOTES TO THE FINANCIAL STATEMENTS
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Basis of Consolidation
Business combinations
Business combinations are accounted for using the acquisition method in accordance with FRS 103 Business
Combination as at the acquisition date, which is the date on which control is transferred to the Group.
The Group measures goodwill at the acquisition date as:
•
The fair value of the consideration transferred; plus
•
The recognised amount of any non-controlling interest (“NCI”) in the acquiree; plus
•
If the business combination is achieved in stages, the fair value of the pre-existing equity interest in the
acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities
assumed. Any goodwill that arises is tested annually for impairment.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognised in profit or loss.
Any contingent consideration payable is recognised at fair value at the acquisition date and included in the
consideration transferred. If the contingent consideration is classified as equity, it is not remeasured and
settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent
consideration are recognised in profit or loss.
NCI that are present ownership interests and entitle their holders to a proportionate share of the acquiree’s
net assets in the event of liquidation are measured either at fair value or at the NCI’s proportionate share of
the recognised amounts of the acquiree’s identifiable net assets, at the acquisition date. The measurement
basis taken is elected on a transaction-by-transaction basis. All other NCI are measured at acquisition-date
fair value, unless another measurement basis is required by FRSs.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that
the Group incurs in connection with a business combination are expensed as incurred.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as
transactions with owners in their capacity as owners and therefore no adjustments are made to goodwill and
no gain or loss is recognised in profit or loss. Adjustments to NCI arising from transactions that do not involve
the loss of control are based on a proportionate amount of the net assets of the subsidiary.
