DOOSAN HEAVY INDUSTRIES & CONSTRUCTION CO., LTD. AND ...

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Doosan Heavy Industries & Construction Co., Ltd. and SubsidiariesNotes to the Consolidated Financial StatementsFor the years ended December 31, 2012 and 20112. Basis of Preparation, Continued(c) Use of estimates and judgments, continuedInformation about assumptions and estimation uncertainties that have a significant risk of resulting in amaterial adjustment within the next financial year are included in the following notes: Note 25 and 26 - Revenue recognition based on percentage of completion(d) Changes in accounting policies(i) Presentation of financial statementsThe Group adopted the amendments to K-IFRS No. 1001, ‘Presentation of Financial Statements’ from theannual period ended December 31, 2012. The Group’s operating profit (loss) is calculated as revenue less: (1)cost of sales, and (2) selling, general and administrative expenses, and is presented separately in thestatement of income.(ii) Impact of change in accounting policyThe Group retrospectively applied the amendment to K-IFRS No. 1001, for which the impact is as follows:(In millions of won)2012 2011Operating profit before adoption of the amendments ₩ 542,223 590,546ChangesOther income (Note 30) (50,678) (100,096)Other expense (Note 30) 103,294 35,707Operating profit after adoption of the amendment ₩ 594,839 526,15716
Doosan Heavy Industries & Construction Co., Ltd. and SubsidiariesNotes to the Consolidated Financial StatementsFor the years ended December 31, 2012 and 20113. Significant Accounting PoliciesThe significant accounting policies applied by the Group in preparation of its consolidated financial statementsare included below. The accounting policies set out below have been applied consistently to all periodsexcept as explained in note 2(d).(1) Consolidation(a) Basis of consolidation(i) SubsidiariesSubsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern thefinancial and operating policies of the other entity so as to obtain benefits from its activities. The existenceand effect of potential voting rights that are currently exercisable or convertible are considered whenassessing whether the Group controls another entity. The financial statements of subsidiaries are included inthe consolidated financial statements from the date that control commences until the date that controlceases.If a member of the Group uses accounting policies other than those adopted in the consolidated financialstatements for like transactions and events in similar circumstances, appropriate adjustments are made to itsfinancial statements in preparing the consolidated financial statements.(ii) Intra-group transactionsIntra-group balances and transactions, and any unrealized income and expenses arising from intra-grouptransactions, are eliminated in preparing the consolidated financial statements. Intra-group losses arerecognized as expense if intra-group losses indicate an impairment that requires recognition in theconsolidated financial statements.(iii)Non-controlling interestsNon-controlling interests in a subsidiary are accounted for separately from the parent’s ownership interests ina subsidiary. Each component of net profit or loss and other comprehensive income is attributed to theowners of the parent and non-controlling interest holders, even when the allocation reduces the noncontrollinginterest balance below zero.(b) Business combination(i) Business combinationA business combination is accounted for by applying the acquisition method, unless it is a combinationinvolving entities or businesses under common control.Each identifiable asset and liability is measured at its acquisition-date fair value except for below:- Leases and insurance contracts are required to be classified on the basis of the contractual terms andother factors- Only those contingent liabilities assumed in a business combination that are a present obligation and canbe measured reliably are recognized- Deferred tax assets or liabilities are recognized and measured in accordance with K-IFRS No. 1012Income Taxes- Employee benefit arrangements are recognized and measured in accordance with K-IFRS No.1019Employee Benefits17
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