Annual report 2010 - plazacenters

Financial statements
Notes to the consolidated financial statements
continued
Note 2 – Basis of preparation continued
When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts
are generally recognized in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in
connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognized at fair value at the acquisition date. If the contingent consideration is classified
as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognized in profit or loss.
When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees
(acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in
measuring the consideration transferred in the business combination. This determination is based on the market-based value of the
replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards
relate to past and/or future service.
Acquisitions prior to January 1, 2010
For acquisitions prior to January 1, 2010, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the
recognized amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess
was negative, a bargain purchase gain was recognized immediately in profit or loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with
business combinations were capitalized as part of the cost of the acquisition.
(ii) Accounting for acquisitions of non-controlling interests
From January 1, 2010 the Group has applied IAS 27 Consolidated and Separate Financial Statements (2008) in accounting for
acquisitions of non-controlling interests. The change in accounting policy has been applied prospectively and has had no impact
on earnings per share.
Under the new accounting policy, acquisitions of non-controlling interests are accounted for as transactions with owners in their
capacity as owners and therefore no goodwill is recognized as a result of such transactions. The adjustments to non-controlling interests
are based on a proportionate amount of the net assets of the subsidiary.
Previously, goodwill was recognized on the acquisition of non-controlling interests in a subsidiary, which represented the excess of
the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the date of the transaction.
(iii) Accounting for results of non-controlling interests
Starting January 1, 2010, the total comprehensive income is attributed to the owners of the parent and to the non- controlling interests
even if this results in the non controlling interests having a deficit balance.
(iv) Excess of current liabilities over current assets in EDT
The financial statements for EDT as at December 31, 2010 have been prepared on a going concern basis as the directors of the
Responsible Entity, after reviewing EDT’s going concern status, have concluded that EDT has reasonable grounds to expect to be
able to pay its debts as and when they become due and payable. As at December 31, 2010, EDT had a net current asset deficiency
of USD 67.6 million (EUR 50.5 million). Regarding the US facility which matures in June 2011 see note 17.
Investment properties in the controlled entities and jointly controlled entities are valued based on a price which would be achieved
between willing parties in an arm’s-length transaction.
If the Group were unable to complete the refinancing of the above facility before maturity, the lender may enforce repayment of the
amount owing and the Group would become a distressed seller of certain assets. The amounts recoverable from the sale of such
investment properties may materially differ to that recorded in the financial statements.
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Plaza Centers N.V. Annual report 2010