0175 Geely Automobile Holdings Limited Annual Report 2011

Annual Report 2011Geely Automobile Holdings LimitedNOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTSFor the year ended 31 December 20115. Significant Accounting PoliciesThe consolidated financial statements have been prepared on the historical cost basis except for certain financialinstruments which are measured at fair values, as explained in the accounting policies set out below.(a)Basis of consolidationAcquisitions of subsidiaries and businesses are accounted for using the acquisition method. The considerationtransferred in a business combination is measured at fair value, which is calculated as the sum of theacquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to theformer owners of the acquiree and the equity interests issued by the Group in exchange for control of theacquiree. Acquisition-related costs are recognised in profit or loss as incurred.The consolidated financial statements incorporate the financial statements of the Company and itssubsidiaries. A subsidiary is an entity in which the Company, directly or indirectly, has the power to governthe financial and operating policies so as to obtain benefits from its activities.The results of subsidiaries acquired or disposed of during the year are included in the consolidated incomestatement from the effective date of acquisition or up to the effective date of disposal, as appropriate.Where necessary, adjustments are made to the financial statements of the subsidiaries to bring theiraccounting policies in line with those used by other members of the Group.All intra-group transactions, balances, income and expenses are eliminated on consolidation.Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to theCompany, and in respect of which the Group has not agreed any additional terms with the holders ofthose interests which would result in the Group as a whole having a contractual obligation in respect ofthose interests that meets the definition of a financial liability. For each business combination, the Groupcan elect to measure any non-controlling interests either at fair value or at their proportionate share ofthe subsidiary’s net identifiable assets. The Group elects to measure any non-controlling interest in thesubsidiary at the non-controlling interest’s proportionate share of the subsidiary’s identifiable net assetsfor all business combinations.Non-controlling interests are presented in the consolidated balance sheet within equity, separately fromthe equity attributable to the equity holders of the Company. Non-controlling interests in the results of theGroup are presented on the face of the consolidated income statement and consolidated statement ofcomprehensive income as an allocation of the total profit or loss and total comprehensive income for theyear between non-controlling interests and equity holders of the Company.Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted foras equity transactions, whereby adjustments are made to the amounts of non-controlling interests withinconsolidated equity to reflect the change in relative interests, but no adjustments are made to goodwilland no gain or loss is recognised.67