63
ANNUAL REPORT 2015
Notes to the Financial Statements (cont’d)
for the financial year ended 30 June 2015
2.
Summary of significant accounting policies (cont’d)
2.4 Basis of consolidation (cont’d)
The Company controls an investee if and only if the Company has all the following:
(i)
Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities
of the investee);
(ii)
Exposure, or rights, to variable returns from its investment with the investee; and
(iii)
The ability to use its power over the investee to affect its returns.
When the Company has less than a majority of the voting rights of an investee, the Company considers the
following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power
over the investee:
(i)
The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the
other vote holders;
(ii)
Potential voting rights held by the Company, other vote holders or other parties;
(iii)
Rights arising from other contractual arrangements; and
(iv)
Any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns
at previous shareholders’ meetings.
Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains
and losses resulting from intra-group transactions are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over
the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and
the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries.
The resulting difference is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous
carrying amount of the assets and liabilities of the subsidiary and any non-controlling interests, is recognised
in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive
income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to
retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost
is regarded as the cost on initial recognition of the investment.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the
amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis
whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share
of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative
expenses.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition
date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset
or liability, will be recognised in accordance with FRS 139 either in profit or loss or as a change to other
comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured.
Subsequent settlement is accounted for within equity. In instances where the contingent consideration does
not fall within the scope of FRS 139, it is measured in accordance with the appropriate FRS.
