Sun Art Retail Group Limited - TodayIR.com

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f)
Hypermarkets operated under Contracted Store arrangements
The Group operates certain hypermarkets through Contracted Store arrangements
(“Contracted Stores”) under which the hypermarket owner (“Contracted Store Owner”)
provides the store, equipment and facilities for use by the Group to carry out the Group’s
hypermarket business and in return is entitled to an annual fee, calculated as either a fixed
amount or a fixed percentage of the store’s sales revenue, and any remaining profit or loss
relating to the operation of the store is attributable to the Group. As the Group bears the
risks and rewards of the store’s operation, the revenue, operating expenses and results
relating to the operation of the Contracted Stores are included in the Group’s consolidated
statement of comprehensive income on a line-by-line basis and the net profit or loss relating
to the operation of the stores attributable to the Group is recorded as an amount due from
or to the Contracted Store Owner, as applicable. Sales of inventories by the Group to the
Contracted Stores are eliminated and the stores’ inventories as of the reporting period end
are incorporated in the Group’s consolidated statement of financial position. Prepaid cards
bought by customers which may be used to purchase goods in other stores of the Group
are recorded as “advance receipts from customers” within “trade and other payables” in the
Group’s consolidated statement of financial position, and a corresponding receivable from
the Contracted Store is recognised.
(g)
Goodwill
Goodwill arises upon the acquisition of subsidiaries. All business combinations are accounted
for by applying the purchase method. Goodwill represents the excess of the fair value of
the consideration transferred over the net fair value of the acquiree’s identifiable assets
and liabilities measured as at the acquisition date. When the excess is negative (negative
goodwill), it is recognised immediately in profit or loss as a gain on a bargain purchase.
Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business
combination is allocated to each cash-generating unit, or groups of cash-generating units,
that is expected to benefit from the synergies of the combination and is tested annually for
impairment (see note 1(l)).
On disposal of a cash generating unit during the year, any attributable amount of purchased
goodwill is included in the calculation of the profit or loss on disposal.
Sun Art Retail Group Limited
Annual Report 2012
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