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Notes to the
financial statements
For the financial year ended 31 December 2018
79
A N N U A L R E P O R T
2 0 1 8
2.
Summary of significant accounting policies (cont’d)
2.4
Basis of consolidation and business combinations (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 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 events 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 SFRS(I).
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. 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.
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) to which the goodwill relates.