NOTES TO THE FINANCIAL STATEMENTS
For The Financial Period From 1 January 2014 To 31 March 2015 (Cont’d)
62
Annual Report 2015
3.
BASIS OF PREPARATION (CONT’D)
3.2 BASIS OF CONSOLIDATION
The consolidated financial statements include the financial statements of the Company and
its subsidiaries made up to the end of the financial period.
Subsidiaries are entities (including structured entities) controlled by theGroup. TheGroup controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are consolidated from the date on which control is transferred to the Group up to
the effective date on which control ceases, as appropriate.
Intragroup transactions, balances, income and expenses are eliminated on consolidation.
Where necessary, adjustments are made to the financial statements of subsidiaries to ensure
consistency of accounting policies with those of the Group.
(a) Merger Accounting For Common Control Business Combinations
The acquisition resulted in a business combination involving common control entities,
and accordingly the accounting treatment is outside the scope of MFRS 3. The merger
accounting is used by the Group to account for such common control business
combinations.
A business combination involving entities under common control is a business combination
in which all the combining entities or subsidiaries are ultimately controlled by the same
party and parties both before and after the business combination, and that control is not
transitory.
Subsidiaries acquired which have met the criteria for pooling of interest are accounted
for using merger accounting principles. Under the merger method of accounting, the
results of the subsidiaries are presented as if the merger had been effected throughout
the financial period.
The assets and liabilities combined are accounted for based on the carrying amounts from
the perspective of the common control shareholder at the date of transfer. No amount is
recognised in respect of goodwill and excess of the acquirer’s interest in the net fair value
of the acquiree’s identifiable assets and liabilities and contingent liabilities over cost at
the time of the common control business combination to the extent of the continuation
of the controlling party and parties’ interests.
When the merger method is used, the cost of investment in the Company’s books is
recorded at the nominal value of shares issued. The difference between the carrying
value of the investment and the nominal value of the shares of the subsidiaries is treated
as a merger deficit or merger reserve as applicable. The results of the subsidiaries being
merged are included for the full financial year.
