ANNUAL REPORT
2016
.65
NOTES TO THE
FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION (CONT¡¯D)
2A.
Significant accounting policies (cont¡¯d)
Subsidiaries
A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the reporting entity
and the reporting entity is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. The existence and effect of substantive
potential voting rights that the reporting entity has the practical ability to exercise (that is, substantive rights) are
considered when assessing whether the reporting entity controls another entity. In the company¡¯s separate financial
statements, an investment in a subsidiary is accounted for at cost less any allowance for impairment in value.
Impairment loss recognised in profit or loss for a subsidiary is reversed only if there has been a change in the
estimates used to determine the asset¡¯s recoverable amount since the last impairment loss was recognised. The
carrying value and the net book value of the investment in a subsidiary are not necessarily indicative of the amount
that would be realised in a current market exchange.
Business combinations
Business combinations are accounted for by applying the acquisition method.
A business combination is a transaction or other event which requires that the assets acquired and liabilities assumed
constitute a business. It is accounted for by applying the acquisition method of accounting. The cost of a business
combination includes the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the acquirer, in exchange for control of the acquiree. The acquisition-related costs
are expensed in the periods in which the costs are incurred and the services are received except for any costs to
issue debt or equity securities are recognised in accordance with FRS 32 and FRS 39. As of the acquisition date,
the acquirer recognises, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any
non-controlling interest in the acquiree measured at acquisition-date fair values as defined in and that meet the
conditions for recognition under FRS 103. If there is gain on bargain purchase, for the gain on bargain purchase
a reassessment is made of the identification and measurement of the acquiree¡¯s identifiable assets, liabilities and
contingent liabilities and the measurement of the cost of the business combination and any excess remaining after
this reassessment is recognised immediately in profit or loss.
As disclosed in Note 29, there is an acquisition of business subsequent to year end. Where the fair values are
measured on a provisional basis they are finalised within one year from the acquisition date with consequent
retrospective changes to the amounts recognised at the acquisition date to reflect new information obtained about
facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement
of the amounts recognised as of that date.
