Annual Report 2012

Notes to the financial statements(Expressed in millions of RMB, unless otherwise stated)3 Statement of complianceThese financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued bythe International Accounting Standards Board (“IASB”) and the disclosure requirements of the Hong Kong Companies Ordinance. Thesefinancial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The StockExchange of Hong Kong Limited.The Group has adopted new or revised IFRSs effective for the current year. There is no early adoption of any new IFRSs not yet effectivefor the year ended 31 December 2012. The following revised IFRS adopted was relevant to these financial statements:• IFRS 7(amendments), Financial Instruments Disclosure On Transfer of Financial Assets – These amendments are issued as part ofthe IASB’s comprehensive review of off balance sheet activities. The amendments promote transparency in the reporting of transfertransactions and improve users’ understanding of the risk exposures relating to transfers of financial assets and the effect of thoserisks on an entity’s financial position, particularly those involving securitisation of financial assets.The adoption of revised IFRS has no significant impact on the financial statements of the Group. The accounting policies set out belowhave been applied consistently by the Group to all periods presented in these financial statements.4 Significant accounting policies and accounting estimates(1) Consolidated financial statements(a) Business combinationsThe consideration transferred by the acquirer for the acquisition and the identifiable assets acquired and liabilities andcontingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Wherethe cost of a business combination exceeds the Group’s interest in the fair value of the acquiree’s identifiable net assets, thedifference is recognised as goodwill in accordance with the accounting policies set out in Note 4(9); where the cost of abusiness combination is less than the Group’s interest in the fair value of the acquiree’s identifiable net assets, the difference isrecognised in profit or loss.Acquisition date mentioned above is the date that the Group effectively obtains control of the acquiree.(b) Subsidiaries and non-controlling interestsSubsidiaries are those enterprises controlled by the Bank. Control exists when the Bank has the power, directly or indirectly,to govern the financial and operating policies of an enterprise so as to obtain benefits from its operating activities. In assessingcontrol, potential voting rights that presently are exercisable are taken into account.For the separate financial statements of the Bank, investments in subsidiaries are accounted for at cost. At initial recognition,investment in subsidiaries is measured at: the cost of acquisition determined at the acquisition date when the subsidiaries areacquired through business combination; or the capital injected into the subsidiaries set up by the Group. Impairment losses oninvestments in subsidiaries are accounted for in accordance with the accounting policies as set out in Note 4(11).The results and affairs of subsidiaries are included in the consolidated financial statements from the date that controlcommences until the date that control ceases. When preparing the consolidated financial statements, the Bank makesnecessary adjustments on the accounting period and accounting policies of subsidiaries to comply with those of the Bank.Intragroup balances and transactions, and any profits or losses arising from intragroup transactions are eliminated in full inpreparing the consolidated financial statements.The portion of a subsidiary’s net assets that is attributable to equity interests that are not owned by the Bank, whether directlyor indirectly through subsidiaries, is treated as non-controlling interests and presented as “non-controlling interests” in theconsolidated statement of financial position within total equity. The portion of net profit or loss and other comprehensiveincome of subsidiaries for the year attributable to non-controlling interests is separately presented in the consolidatedstatement of comprehensive income as a component of the Group’s net profit.100 China Construction Bank Corporation annual report 2012