Annual Report 2012, PDF - Axiata Group Berhad - Investor Relations

Axiata Group Berhad (242188-H) Annual Report 20123. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)(a) Economic entities in the Group (continued)(i)Subsidiaries (continued)The Group applies the acquisition method to account for business combinations. The considerationtransferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilitiesincurred to the former owners of the acquiree and the equity interests issued by the Group. Theconsideration transferred includes the fair value of any asset or liability resulting from a contingentconsideration arrangement. Identifiable assets acquired, liabilities and contingent liabilities assumed in abusiness combination are measured initially at their fair values at the acquisition date. The Grouprecognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either atfair value or at the non-controlling interest’s proportionate share of the recognised amounts ofacquiree’s identifiable net assets.Under the predecessor method of merger accounting, the results of subsidiaries are presented as if themerger had been effected throughout the current and previous years. The assets and liabilitiescombined are accounted for based on the carrying amounts from the perspective of the commoncontrol shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled withthe values of the shares received. Any resulting credit difference is classified as equity and regardedas a non-distributable reserve. Any resulting debit difference is adjusted against any suitable reserve.Any share premium, capital redemption reserve and any other reserves which are attributable to sharecapital of the merged enterprises, to the extent that they have not been capitalised by a debitdifference, are reclassified and presented as movement in other capital reserves.Acquisition-related costs are expensed as incurred.If the business combination is achieved in stages, the acquisition date fair value of the acquirer’spreviously held equity interest in the acquiree is remeasured to fair value at the acquisition datethrough consolidated profit or loss.Any contingent consideration to be transferred by the Group is recognised at fair value at theacquisition date. Subsequent changes to the fair value of the contingent consideration that is deemedto be an asset or liability is recognised in accordance with MFRS 139 either in profit or loss or as achange to other comprehensive income. Contingent consideration that is classified as equity is notremeasured, and its subsequent settlement is accounted for within equity.Goodwill is initially measured as the excess of the aggregate of the consideration transferred and thefair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. Ifthis consideration is lower than the fair value of the net assets of the subsidiary acquired, the differenceis recognised in consolidated profit or loss. The accounting policy of goodwill is stated in Note 3(b)(i)to the financial statements. Goodwill is carried at cost less accumulated impairment losses, if any.Inter-company transactions, balances and unrealised gains on transactions between the Group’scompanies are eliminated. Profits and losses resulting from inter-company transactions that arerecognised in assets are also eliminated. Accounting policies of subsidiaries have been changed wherenecessary to ensure consistency with the policies adopted by the Group.179