Vision - Alibaba

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.1 Consolidation (Continued)
Notes to the Financial Statements
(i) Purchase method of accounting
The cost of an acquisition is measured at the fair value of the assets given, equity instruments
issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable
to the acquisition. Identifi able assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the acquisition date. The
excess of the cost of acquisition over the fair value of the Group’s share of the identifi able 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 recognized directly in the income
statement.
(ii) Business combinations under common control
The consolidated fi nancial statements incorporate the fi nancial statement items of the combining
entities or business in which the common control combination occurs as if they had been
consolidated from the date when the combining entities or businesses fi rst came under the
control of the controlling party.
The net assets of the combining entities or businesses are consolidated using the existing book
values from the controlling parties’ perspective. No amount is recognized in respect of goodwill
or excess of acquirer’s interest in the net fair value of the acquiree’s identifi able assets, liabilities
and contingent liabilities over cost at the time of common control combination, to the extent of
the contribution of the controlling party’s interest. All differences between the cost of acquisition
(fair value of consideration paid) and the amounts at which the assets and liabilities are recorded
have been recognized directly in equity as part of the capital reserve.
The consolidated income statement includes the results of each of the combining entities
or businesses from the earliest date presented or since the date when combining entities
or business fi rst came under common control, where this is a shorter period, the date of the
common control combination is disregarded.
The comparative amounts in the consolidated fi nancial statements are presented as if the entities
or business had been consolidated at the earliest balance sheet date presented or when they fi rst
came under common control, whichever is the later.
97