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Glorious Property
Annual Report 2011
Notes to the Consolidated Financial Statements
(Continued)
31 December 2011
2 Summary of Significant Accounting Policies
(Continued)
(b) CONSOLIDATION
The consolidated financial statements include the financial statements of the Company and all its subsidiaries.
(i) Subsidiaries
Subsidiaries are all entities (including special purpose vehicles) over which the Group has the power to govern the
financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that the control ceases.
The Group uses the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owner of
the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of
any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed
as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are 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 either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets.
Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in
consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of
investment. The results of subsidiaries are accounted for by the Company on the basis of dividend receivable.
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 identifiable
net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary
acquired in the case of a bargain purchase, the difference is recognised directly in the consolidated statement of
comprehensive income.
Inter-company transactions, balances and unrealised gains on transactions between companies comprising the
Group are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.