Annual Report 2012 - Dialog

58 l Dialog Axiata PLC l Annual Report 2012
Notes to the Financial Statements
2 Summary of significant accounting policies contd.
2.1.1 Changes in accounting policies and disclosures
New accounting standards, amendments and interpretations issued but not effective for the financial year beginning
1st January, 2012 and not early adopted.
(i) SLFRS 13, ‘Fair Value Measurement’ aims to improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value measurement and disclosure requirements for use across
SLFRSs.
(ii) SLFRS 10, ‘Consolidated Financial Statements’, builds on existing principles by identifying the concept of control
as the determining factor in whether an entity should be included within the consolidated financial statements of the
parent company. The standard provides additional guidance to assist in the determination of control where this is
difficult to assess. The Company and the Group is yet to assess SLFRS 10’s full impact.
(iii) FRS 12, ‘Disclosures of Interests in Other Entities’, includes the disclosure requirements for all forms of interests
in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet
vehicles. The Company and the Group is yet to assess SLFRS 12’s full impact.
(iv) SLFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets
and financial liabilities and replaces the areas of LKAS 39 which relate to classification and measurement of financial
instruments. SLFRS 9 requires financial assets to be classified in to two measurement categories at initial recognition
which are financial assets measured as at fair value and financial assets measured at amortised cost. The
classification depends on the entity’s business model for managing its financial instruments and the contractual cash
flow characteristics of the instrument. For financial liabilities, the standard retains majority of the IAS 39 requirements.
The main change being the fair value option taken as financial liabilities, the part of a fair value change due to an
entity’s own credit risk is recorded in other comprehensive income in the statement of comprehensive income,
unless this creates an accounting mismatch. The Company and the Group is yet to assess SLFRS 9’s full impact.
2.2 Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial
and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are de-consolidated from the date that control ceases. The Group also assesses existence of control where it does
not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto
control. De-facto control may arise in circumstances where the size of the Group’s voting rights relative to the size and
dispersion of holdings of other shareholders give the Group the power to govern the financial and operating policies, etc.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.