Annual Report 2010 - SBM Offshore

Financial Review / Financial Statements 2010
transaction occurred during the year 2010.
• IAS 36 (amendment), ‘Impairment of assets’ (effective
from 1 January 2010). The amendment clarifies
that the largest cash-generating unit (or group of
units) to which goodwill should be allocated for
the purposes of impairment testing is an operating
segment, as defined by paragraph 5 of IFRS 8,
‘Operating segments’. The change in accounting
policy was applied prospectively and had no impact
on the financial statements.
(b) Standards, amendments and interpretations effective
in 2010 but not relevant.
The following standards, amendments and interpretations
to published standards are mandatory for
accounting periods beginning on or after 1 January
2010 but they are not relevant to the Company’s
operations:
• IFRIC 9 ‘Reassessment of embedded derivatives
and IAS 39, Financial instruments: Recognition and
measurement’ (effective from 1 July 2009).
• IFRS 1 (amendment), ‘First time adoption of IFRS’
(effective from 1 January 2010)
• IFRS 2 (amendment), ‘Share-based Payments,
Group Cash-settled Share-based Payments’
(effective from 1 January 2010).
• IAS 32 (amendment), ‘Financial Instruments:
Presentation, Classification of rights issues’
(effective from 1 February 2010).
• IFRIC 19, ‘Extinguishing Financial liabilities with
Equity’ (effective from 1 July 2010).
(c) Standards, amendments and interpretations to
existing standards that are not yet effective and have
not been adopted early by the Company.
• IFRS 9, ‘Financial Instruments’ (effective from 1
January 2013).
(d) Standards, Amendments and interpretations to
existing standards that are not yet effective and not
relevant.
• IAS 24 (amendment) 'Related party disclosures'
(effective from 1 January 2011).
116 SBM Offshore – Annual Report 2010
• IFRIC 14 (amendment) 'IAS 19 - The limit on a
defined benefit asset, minimum funding requirements
and their interactions' (effective from 1
January 2011)
Consolidation
Subsidiaries
Subsidiaries are entities (including special purpose entities)
controlled by the Company. Control exists when
the Company has the power, directly or indirectly, to
govern the financial and operating policies of an entity
so as to obtain benefits from its activities generally
accompanying a shareholding of more than one half of
the voting rights. Potential voting rights that presently
are exercisable or convertible are considered when
assessing whether the Company controls another
entity. The figures of the subsidiaries are included in the
financial statements from the date that control commences
until such control ceases.
The purchase method of accounting is used to account
for the acquisition of subsidiaries by the Company.
The cost of an acquisition is measured as the fair value
of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are
measured initially at their fair values at the acquisition
date, irrespective of the extent of any non-controlling
interest. The excess of the cost of acquisition over the
fair value of the Company's share of the identifiable net
assets acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets
of the subsidiary acquired, the difference is recognised
directly in the income statement.
Transactions and non-controlling interests
The Company applies a policy of recognizing trading
transactions with non-controlling interests as transactions
with external parties. Disposals to non-controlling
interests result in gains and losses for the Company
and are recorded in the income statement. Purchases
from non-controlling interests result in goodwill, being
the difference between any consideration paid and
the relevant share acquired of the carrying value of net
assets of the non-controlling interest.