Annual Accounts and Report as at 30 June 2011 Draft - Mediobanca

Sectction 3Area and methods of consolidationSubsidiaries are consolidated on the line-by-line basis, whereas investmentsin associates and jointly-controlled operations are consolidated and accounted forusing the equity method.When a subsidiary is fully consolidated, the carrying amount of the parent’sinvestment and its share of the subsidiary’s equity are eliminated against theaddition of that company’s assets and liabilities, income and expenses to theparent company’s totals. Any surplus arising following allocation of asset andliability items to the subsidiary is recorded as goodwill. Intra-group balances,transactions, income and expenses are eliminated upon consolidation.For equity-accounted companies, any differences in the carrying amount ofthe investment and investee company’s net equity are reflected in the book valueof the investment, the fairness of which is tested at the reporting date or whenevidence emerges of possible impairment. The profit made or loss incurred by theinvestee company is recorded pro-rata in the profit and loss account under aspecific heading.Control of Ducati Financial Services was acquired during the twelve monthsunder review, which was then merged into Compass S.p.A.; the liquidation ofTechnostart S.p.A. was also completed during the year.74 –