2013 Apr 15 Annual Report 2012 - Phosphagenics

Notes to the consolidated fi nancial statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Basis of consolidation
The consolidated fi nancial statements comprise the fi nancial statements of Phosphagenics Limited
and its subsidiaries as at and for the period ended 31 December each year (‘the Group’).
Subsidiaries are all those entities over which the Group has the power to govern the fi nancial and
operating policies so as to obtain benefi ts from their activities. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether a group
controls another entity.
The fi nancial statements of subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies.
In preparing the consolidated fi nancial statements, all intercompany balances and transactions, income
and expenses and profi t and losses resulting from intra-group transactions have been eliminated in full.
Investments in subsidiaries held by Phosphagenics Limited are accounted for at cost in the separate
fi nancial statements of the parent entity less any impairment charges.
(d) Operating Segments
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An operating segment is a component of an entity that engages in business activities from which it may
earn revenues and incur expenses (including revenues and expenses relating to transactions with other
components of the same entity), whose operating results are regularly reviewed by the entity’s chief
operating decision maker to make decisions about resources to be allocated to the segment and assess
its performance and for which discrete fi nancial information is available. Management will also consider
other factors in determining operating segments such as the existence of a line manager and the level
of segment information presented to the board of directors.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately.
However, an operating segment that does not meet the quantitative criteria is still reporting separately
where information about the segment would be useful to users of the fi nancial statements.
Information about other business activities and operating segments that are below the quantitative criteria
are combined and disclosed in a separate category for “all other segments”.
(e) Significant accounting judgements, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a signifi cant risk of causing
a material adjustment to the carrying amounts of certain assets and liabilities within the next annual
reporting period are:
Impairment of intangibles with indefinite useful lives
The Group determines whether intangible assets with indefi nite useful lives, and intangible assets
not yet available for use, are impaired at least on an annual basis. This requires an estimation of the
recoverable amount of the cashgenerating unit to which the goodwill is allocated. The assumptions used
in this estimation of recoverable amount and the carrying amount of intangibles with indefi nite useful lives
are discussed in note 10.
During the reporting period, certain intangible assets previously assessed as having indefi nite useful lives
were reassessed as having fi nite useful lives. As such these intangible assets have begun being amortised
over the remaining expiry period of the patents.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by using the
Binomial method taking into account the terms and conditions upon which the instruments were granted,
as discussed in note 5. The accounting estimates and assumptions relating to equity-settled share-based
payments would have no impact on the carrying amounts of assets and liabilities with the next annual
reporting period but may impact expenses and equity.
PHOSPHAGENICS ANNUAL REPORT 2012