47
TEHO INTERNATIONAL INC LTD.
Annual Report 2016
NOTES
TO THE FINANCIAL STATEMENTS
Year ended 30 June 2016
3 SIGNIFICANTACCOUNTING POLICIES (CONT’D)
3.1 Basis of consolidation (cont’d)
(i)
Business combinations (cont’d)
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.
Non-controlling interests that are present ownership interests and entitle their
holderstoaproportionate shareoftheacquiree’s net assets intheevent ofliquidation
are measured either 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. 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.
3 SIGNIFICANTACCOUNTING POLICIES (CONT’D)
3.1 Basis of consolidation (cont’d)
(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.
(iii) Investments in associates (equity-accounted investees)
Associates are those entities in which the Group has significant influence, but not
control or joint control, over the financial and operating policies of these entities.
Significant influence is presumed to exist when the Group holds between 20% or
more of the voting power of another entity.
Investments in associates are accounted for using the equity method. They are
recognised initially at cost, which includes transaction costs. Subsequent to initial
recognition, the consolidated financial statements include the Group’s share of
the profit or loss and other comprehensive income of equity-accounted investees,
after adjustments to align the accounting policies with those of the Group, from
the date that significant influence commences until the date that significant
influence ceases.
