EirGrid plc Annual Report 2011

EirGrid plc Annual Report & Accounts 2011
2. Statement of Accounting Policies
(continued)
the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net
assets. Acquisition costs are expensed as incurred.
When the Group acquires a business it assesses
the financial assets and liabilities assumed for
appropriate classification and designation in
accordance with the contractual terms, economic
circumstances and pertinent conditions as at the
acquisition date. If the business combination is
achieved in stages, the acquisition date fair value
of the acquirer’s previously held equity interest
in the acquiree is re-measured to fair value at the
acquisition date through the Income Statement.
Any contingent consideration to be transferred
by the acquirer will be recognised at fair value at
the acquisition date. Subsequent changes to the
fair value of the contingent consideration which is
deemed to be an asset or liability will be recognised
in accordance with IAS 39 in the Income Statement.
Goodwill is initially measured at cost being the
excess of the aggregate of the consideration
transferred and the amount recognised for noncontrolling
interest over the net identifiable assets
acquired and liabilities assumed.
Business combinations prior to 1 April 2010
were accounted for using the purchase method.
Transaction costs directly attributable to the
acquisition formed part of the acquisition costs.
The non-controlling interest (formerly known as
minority interest) was measured at the proportionate
share of the acquiree’s identifiable net assets.
Business combinations achieved in stages were
accounted for as separate steps. Any additional
acquired share of interest did not affect previously
recognised goodwill.
Contingent consideration was recognised if the
Group had a present obligation, the economic
outflow was more likely than not and a reliable
estimate was determinable. Subsequent
adjustments to the contingent consideration were
recognised as part of goodwill.
Goodwill
Goodwill on acquisitions is initially measured at
cost being the excess of the cost of the business
combination over the acquirer’s interest in the
net fair value of the identifiable assets, liabilities
and contingent liabilities. Goodwill acquired in
a business combination is allocated, from the
acquisition date, to the cash-generating units or
groups of cash-generating units that are expected to
benefit from the business combination in which the
goodwill arose.
Following initial recognition, goodwill is measured
at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment annually
or more frequently if events or changes in
circumstances indicate that the carrying value may
be impaired.
Goodwill is subject to impairment testing on an
annual basis and at any time during the year if an
indicator of impairment is considered to exist, the
goodwill impairment tests are undertaken at a
consistent time in each annual period. Impairment
is determined by assessing the recoverable amount
of the cash-generating unit to which the goodwill
relates. Where the recoverable amount of the cash
generating unit is less than the carrying amount, an
impairment loss is recognised. Impairment losses
arising in respect of goodwill are not reversed
following recognition.
Where a subsidiary is sold, any goodwill arising on
acquisition, net of any impairments, is included in
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