Annual Report 2010 - Falck

Notes to the Group financial statements
Note
1 Accounting policies (continued)
The line items of the financial statements of subsidiaries are
fully consolidated in the consolidated financial statements.
Profit for the year and equity attributable to non-controlling
interests in subsidiaries that are not fully controlled are
included in the consolidated profit and equity and stated as
separate line items.
Associates
Enterprises in which the Falck Group exercises significant influence
but not control are classified as associates. Significant
influence is generally achieved by directly or indirectly holding
or controlling more than 20%, but less than 50%, of the voting
rights.
Unrealised gains on transactions with associates are eliminated
in proportion to the Group’s share of the enterprise.
BUSINESS COmBINATIONS
Companies acquired or established during the financial year
are recognised as from the date of acquisition or inception.
Companies divested or discontinued are recognised in the
income statement until the date of divestment. The comparative
figures are not restated to reflect companies acquired,
divested or discontinued.
Acquisitions of subsidiaries or associates are accounted for
applying the acquisition method. Identifiable assets, liabilities
and contingent liabilities of acquirees are stated at their fair
value at the date of acquisition. Identifiable intangible assets
are recognised if they are separable or derive from a contractual
right. Deferred tax on revaluations is recognised.
The acquisition date is the date on which the Group obtains
control of the acquiree.
Any positive difference between the consideration and the value
of non-controlling interests in the acquiree and the fair value
of the previously held interests in the acquiree, on the one
hand, and the fair value of the identifiable assets, liabilities
and contingent liabilities, on the other hand, is recognised in
the balance sheet as goodwill. Goodwill is not amortised, but
is tested for impairment at least once a year. On acquisition,
goodwill is allocated to the cash-generating units which will
subsequently form the basis for future impairment tests. Any
goodwill arising and any fair value adjustments made on the
acquisition of a foreign company whose functional currency is
not the same as the presentation currency used by the Group
are treated as assets and liabilities of the foreign company and
are translated on initial recognition to the foreign company’s
Group | Falck Annual Report 2010 57
functional currency at the exchange rate ruling at the transaction
date. Any negative difference is recognised in the income
statement on the date of acquisition.
The consideration in a business combination consists of the
fair value of the agreed purchase price. For business combinations
in which the agreement includes a provision on
adjustment of the consideration conditional on future events
(earn-out), the fair value of this part of the consideration is
recognised at the date of acquisition. Any changes in the fair
value of the contingent consideration after initial recognition
are recognised in the income statement. Put options issued in
connection with acquisitions, the value of which is contingent
on future events, are recognised as part of the consideration
at the date of acquisition. The put options issued are subsequently
measured at fair value. Any changes in the fair value of
the issued put options after initial recognition are recognised
in equity. Acquisition costs directly attributable to the acquisition
are recognised in the income statement.
Adjustments of liabilities in connection with contingent consideration
and issued put options, the value of which is conditional
on future events relating to business combinations with
an acquisition date prior to 1 January 2010, will continue to be
recognised in accordance with IFRS 3 (2004), i.e. adjustments
are recognised in goodwill until the conditions have been met
or the issued put options are exercised.
If uncertainties regarding the measurement of acquired identifiable
assets, liabilities, contingent liabilities or the consideration
for the business combination exist at the acquisition date,
initial recognition takes place on the basis of preliminary fair
values. If identifiable assets, liabilities, contingent liabilities
and the consideration for the business combination are subsequently
determined to have had a different fair value at the
acquisition date than first assumed, goodwill is adjusted until
12 months after the acquisition date. The effect of the adjustments
is recognised in the opening equity, and the comparative
figures are restated accordingly. Goodwill is not adjusted
subsequently except in the event of material errors.
Gains or losses on divestment or winding up of subsidiaries
and associates are stated as the difference between the sales
or disposal amount and the carrying amount of the net assets
including goodwill at the time of sale plus sales or winding
up costs. In addition, any retained non-controlling interests
are measured at fair value. Gains or losses on the divestment
or winding up of subsidiaries and associates and the effect of
renewed measurement of any non-controlling interests are
recognised in the income statement.