3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Business combinations
(continued)
Any contingent consideration payable is recognised at fair value at the acquisition date and included in the consideration
transferred. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within
equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in the income statement.
When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s
employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement
awards is included in measuring the consideration transferred in the business combination. This determination is based on
the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the
extent to which the replacement awards relate to past and/or future services.
For non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the
acquiree’s net assets in the event of liquidation, the Group elects on a transaction-by-transaction basis whether to measure
them at fair value, or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s
identifiable net assets, at the acquisition date. All other non-controlling interests are measured at acquisition-date fair value
unless another measurement basis is required by FRSs.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with
owners in their capacity as owners and therefore no adjustments are made to goodwill and no gain or loss is recognised in
profit or loss. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are
based on a proportionate amount of the net assets of the subsidiary.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports in its financial statements provisional amounts for the items for which the accounting is incomplete.
During the measurement period, which does not exceed one year from the acquisition date, the Group will retrospectively adjust
the provisional amounts recognised at the acquisition date to reflect new information obtained about facts and circumstances
that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognised as
of that date. During the measurement period, the Group shall also recognise additional assets or liabilities if new information
is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the
recognition of those assets and liabilities as of that date.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it 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. The
financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the
Group. Losses applicable to the non-controlling interest (“NCI”) in a subsidiary are allocated to the NCI even if doing so causes
the NCI to have a deficit balance.
For loans granted to its subsidiaries, the Company evaluates the nature of these funding transactions in order to determine
if the loan shall in substance be regarded as part of the Company’s net investment in the subsidiary. If so, measurement and
disclosures requirements of FRS 39 and FRS 107 would not apply, and such loans would be stated at cost less accumulated
impairment in the Company’s balance sheet.
63
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
