for the year ended 31 December 2016
NOTES TO THE
FINANCIAL STATEMENTS
Annual Report 2016
-
88
-
2.
Summaryofsignificantaccountingpolicies (cont’d)
2.3
Basis of consolidation and business combination (cont’d)
(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 aremeasured initially at their fair values at
the acquisition date.Acquisition-related costs are recognised as expenses in the periods inwhich 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
acquisitiondate. Subsequent changes to the fair valueof thecontingent considerationwhich isdeemed
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
ofnet assets in theeventsof liquidation, is recognisedon theacquisitiondateat fairvalue, orat thenon-
controlling interest’s proportionate shareof the acquiree’s identifiablenet assets.Other componentsof
non-controlling interests aremeasured at their acquisitiondate fair value, unless anothermeasurement
basis is required by another FRS.
Anyexcessof thesumof the fairvalueof theconsideration transferred in thebusinesscombination, the
amount of non-controlling interest in theacquiree (if any), and the fair valueof theGroup’spreviously
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. 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 initiallymeasured at cost. Following initial recognition, goodwill ismeasured 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.
The cash-generating units to which goodwill have been allocated is tested for impairment annually
and whenever there is an indication that the cash-generating unit may be impaired. Impairment is
determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group
of cash-generating units) towhich the goodwill relates.
