Bursa Malaysia • Annual Report 2013
105
Financial Reports
2. Significant accounting policies (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)
(a) Subsidiaries and basis of consolidation (cont’d.)
(ii) Basis of consolidation (cont’d.)
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
Acquisition of subsidiaries are accounted for using the purchase method except for business combinations arising from common control
transfers. Business combinations involving entities under common control are accounted for by applying the pooling of interest method. The
assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the
controlling holding company. Any difference between the consideration paid and the share capital of the “acquired” entity is reflected within
equity as merger reserve or merger deficit. Merger deficit is adjusted against suitable reserves of the entity acquired to the extent that laws
or statutes do not prohibit the use of such reserves.
The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination
takes place. Comparatives are presented as if the entities have always been combined since the date the entities had come under common
control.
Under the purchase method of accounting, identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the date of acquisition. Adjustments to those fair values relating to previously held
interests are treated as a revaluation and recognised in other comprehensive income. The cost of a business combination is measured as the
aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus
any costs directly attributable to the business combination.
Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets,
liabilities and contingent liabilities is recorded as goodwill on the statement of financial position. The accounting policy for goodwill is set out
in Note 2.4(c)(i). Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent
liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires
a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business
combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under
the contract.
(iii) Transactions with non-controlling interest
Non-controlling interest represents the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented
separately in profit or loss of the Group and within equity in the consolidated statements of financial position, separately from parent
shareholders’ equity. Transactions with non-controlling interest are accounted for using the entity concept method, whereby, transactions
with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interest, the difference
between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to
non-controlling interest is recognised directly in equity.
Notes to the Financial Statements
31 December 2013
