2. Summary of significant accounting policies (cont’d)
2.5 Basis of consolidation and business combinations (cont’d)
(a) Basis of consolidation (cont’d)
• Recognises the fair value of the consideration received;
• Recognises the fair value of any investment retained;
• Recognises any surplus or deficit in profit or loss;
• Reclassifies the Group’s share of components previously recognised in other
comprehensive income to profit or loss or retained earnings, as appropriate.
(b) Business combinations and goodwill
Business combinations are accounted for by applying the acquisition method.
Identifiable assets acquired and liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. Acquisition-related
costs are recognised as expenses in the periods in which the costs are incurred and
the services are received.
Any contingent consideration to be transferred by the acquirer will be recognised
at fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration which is deemed to be an asset or liability, will be
recognised in profit or loss.
The Group elects for each individual business combination, whether non-controlling
interest in the acquiree (if any), that are present ownership interests and entitle
their holders to a proportionate share of net assets in the event of liquidation, is
recognised on the acquisition date at fair value, or at the non-controlling interest’s
proportionate share of the acquiree’s identifiable net assets. Other components of
non-controlling interests are measured at their acquisition date fair value, unless
another measurement basis is required by another FRS.
Any excess of the sum of the fair value of the consideration transferred in the
business combination, the amount of non-controlling interest in the acquiree (if
any), and the fair value of the Group’s previously held equity interest in the acquiree
(if any), over the net fair value of the acquiree’s identifiable assets and liabilities is
recorded as goodwill. The accounting policy for goodwill is set out in Note 2.11(a).
In instances where the latter amount exceeds the former, the excess is recognised
as gain on bargain purchase in profit or loss on the acquisition date.
Goodwill is initially measured at cost. Following initial recognition, goodwill is
measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination
is, from the acquisition date, allocated to the Group’s cash-generating units that are
expected to benefit from the synergies of the combination, irrespective of whether
other assets or liabilities of the acquiree are assigned to those units.
NOTES TO THE FINANCIAL
STATEMENTS
For the financial year ended 30 June 2015
ASL Marine Holdings Ltd. /Annual Report 2015
80
