ANNUAL REPORT 2014
59
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
For the financial year ended 31 December 2014
2.
SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(c)
Group accounting
(1)
Subsidiaries
(i)
Consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity including
those entities which the Group has less than 50% equity interest.
Subsidiaries are consolidated from the date on which control is transferred to the Group. They
are de-consolidated from the date on which control ceases.
In preparing the consolidated financial statements, transactions, balances and unrealised gains
on transactions between group entities are eliminated. Unrealised losses are also eliminated
but are considered an impairment indicator of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
(ii)
Acquisitions
The acquisition method of accounting is used to account for business combinations by the Group.
The consideration transferred for the acquisition of a subsidiary or business comprises the fair
value of the assets transferred, the liabilities incurred and the equity interests issued by the
Group. The consideration transferred also includes the fair value of any contingent consideration
arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair values at the acquisition
date.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in
the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over
the fair value of the net identifiable assets acquired is recorded as goodwill. Please refer to Note
2(e)(1) for the Group’s accounting policy on goodwill on acquisition of subsidiaries.
Please refer to Note 2(g) for the Company’s accounting policy on investments in subsidiaries
and associated companies.
