47
Annual Report 2015
TEHO INTERNATIONAL INC LTD.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.1 Basis of consolidation (cont’d)
(i) Business combinations (cont’d)
The Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the pre-
existing equity in interest in the acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired
and liabilities assumed. Any goodwill that arises is tested annually for impairment.
When the excess is negative, a bargain purchase gain is recognised immediately in
profit or loss.
The consideration transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts are generally recognised in profit or loss.
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 profit or loss.
When share-based payment awards (replacement awards) are 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 service.
3 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
3.1 Basis of consolidation (cont’d)
(i) Business combinations (cont’d)
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 are
measured either at fair value or at the non-controlling interests’ proportionate share of
the recognised amounts of the acquireee’s identifiable net assets, at the acquisition
date. The measurement basis taken is elected on a transaction-by-transaction basis.
All other non-controlling interests are measured at acquisition-date fair value, unless
another measurement basis is required by FRSs.
Costs related to the acquisition, other than those associated with the issue of debt
or equity securities, that the Group incurs in connection with a business combination
are expensed as incurred.
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.
(ii) 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
interests in a subsidiary are allocated to the non-controlling interests even if doing so
causes the non-controlling interests to have a deficit balance.
NOTES TO THE
FINANCIAL STATEMENTS
Year ended 30 June 2015
