AR for 2008 - Abterra

42 ABTERRA
Annual Report 2008
NOTES TO THE FINANCIAL STATEMENTS
For the financial period ended 31 December 2008
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.4 Group accounting (cont’d)
(a)
Subsidiaries (cont’d)
Acquisitions of the subsidiaries are accounted for using the purchase method. The costs of an
acquisition is measured at 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.
Identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially
at their fair values at the acquisition date, irrespective of the extent of any minority interest.
Subsidiaries are consolidated from the date of acquisition, being the date of which the Group
obtains control, and continue to be consolidated until the date that such control ceases.
(b)
Minority interests
Minority interests represent the portion of the profit and loss and net assets in subsidiaries not
held by the Group. They are presented in the consolidated balance sheet within equity, separately
from the equity of the shareholders of the Company, and separately disclosed in the consolidated
income statement.
Where the losses applicable to the minority in a subsidiary exceed the minority interests in the
equity of that subsidiary, the excess and further losses applicable to the minority interests are
attributed to the equity holders of the Company, unless the minority has a binding obligation to,
and is able to make good the losses. When that subsidiary subsequently reports profits, the profits
applicable to the minority interests are attributed to the equity holders of the Company until the
minority interests’ share of losses previously absorbed by the equity holders of the Company has
been recovered.
(c)
Associated company
An associated company is an entity over which the Group has significant influence, but not
control, generally accompanied by a shareholding giving rise to between and including 20% to
50% of the voting rights. Investment in associated company is accounted for in the consolidated
financial statements using the equity method of accounting. Investments in associated companies
in the consolidated balance sheet includes goodwill (net of any accumulated impairment losses)
identified on acquisition. The goodwill is assessed for impairment as part of the investment in
associated company.
Investment in an associated company is initially recognised at cost. The cost of an acquisition is
measured at the fair value of the assets given, equity instruments issued or liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the acquisition.
In applying the equity method of accounting, the Group’s share of its associated company’s postacquisition
profits or losses is recognised in the income statements and its share of post-acquisition
movements in reserves is recognised in equity directly. These post-acquisition movements are
adjusted against the carrying amount of the investment. When the Group’s share of losses in
an associated company equals or exceeds its interest in the associated company, including any
other unsecured non-current receivables, the Group does not recognise further losses, unless it
has obligations or has made payments on behalf of the associated company.