46
TEHO INTERNATIONAL INC LTD.
Annual Report 2016
NOTES
TO THE FINANCIAL STATEMENTS
Year ended 30 June 2016
2 BASIS OF PREPARATION (CONT’D)
When measuring the fair value of an asset or a liability, the Group uses market
observable data as far as possible. Fair values are categorised into different levels in
a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices).
• Level 3: inputs for the asset or liability that are not based on observable market
data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised
in different levels of the fair value hierarchy, then the fair value measurement is
categorised in its entirety in the same level of the fair value hierarchy as the lowest
level input that is significant to the entire measurement (with Level 3 being the lowest).
The Group recognises transfers into and out of fair value hierarchy levels as of the date
of the event or change in circumstances that caused the transfer.
Further information about the assumptions made in measuring fair values is included
in the following notes:
• Note 4 Property, plant and equipment; and
• Note 29 Financial instruments.
3 SIGNIFICANTACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods
presented in these financial statements, and have been applied consistently by
Group entities.
3.1 Basis of consolidation
(i)
Business combinations
Business combinations are accounted for using the acquisition method in
accordance with FRS 103 Business Combination as at the acquisition date, which
is the date on which control is transferred to the Group.
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.
