Annual Report 2007 - Hmdatalink.com hm datalink

Notes to the consolidated financial statementsfor the year ended 31 December 20074. SIGNIFICANT ACCOUNTING POLICIES (Continued)(b)GoodwillGoodwill represents the excess of cost of a business combination or an investment in an associateover the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities andcontingent liabilities assumed as at the date of acquisition.Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cashgeneratingunits and is tested annually for impairment. In respect of associates, the carrying amountof goodwill is included in the carrying amount of the interest in the associate.Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilitiesand contingent liabilities over the cost of a business combination or an investment in an associateis recognised immediately in the income statement. Any excess of the Group’s interest in theattributable net carrying amount in the identifiable assets, liabilities and contingent liabilities inrespect of the acquisition of additional interests in the subsidiary over the cost of the additionalinvestment is recognised immediately in the income statement.On disposal of a cash-generating unit or an associate, any attributable amount of purchased goodwillis included in the calculation of the profit or loss on disposal.(c)Interests in associatesAn associate is an entity over which the Group has significant influence and that is neither a subsidiarynor an interest in a joint venture.The results and assets and liabilities of associates are incorporated in these consolidated financialstatements using the equity method of accounting. Under the equity method, investments inassociates are carried in the consolidated balance sheet at cost as adjusted for post-acquisitionchanges in the Group’s share of the net assets of the associate, less any identified impairment loss.When the Group’s share of losses of an associate equals or exceeds its interest in that associate (whichincludes any long-term interests that, in substance, form part of the Group’s net investment in theassociate), the Group discontinues recognising its share of further losses. An additional share of lossesis provided for and a liability is recognised only to the extent that the Group has incurred legal orconstructive obligations or made payments on behalf of that associate.Where a group entity transacts with an associate of the Group, profits and losses are eliminated to theextent of the Group’s interest in the relevant associate.GEELY AUTOMOBILE HOLDINGS LIMITED65ANNUAL REPORT 2 0 0 7