2.
Summary of significant accounting policies (cont’d)
2.6 Basis of consolidation and business combinations (cont’d)
B)
Business combinations
Business combinations involving entities under common control are accounted for by applying the pooling of interest
method which involves the following:
-
The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the
consolidated financial statements of the controlling holding company.
-
No adjustments are made to reflect the fair values on the date of combination, or recognise any new assets or
liabilities.
-
No additional goodwill is recognised as a result of the combination.
-
Any difference between the consideration paid/transferred and the equity ‘acquired’ is reflected within the equity
as merger deficit.
-
The consolidated income statement reflects the results of the combining entities for the full year, irrespective of
when the combination took place.
-
Comparatives are presented as if the entities had always been combined since the date the entities had come
under common control.
2.7 Joint arrangements
A joint arrangement is a contractual arrangement whereby two or more parties have joint control. Joint control is the contractually
agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous
consent of the parties sharing control.
A joint arrangement is classified either as joint operation or joint venture, based on the rights and obligations of the parties to
the arrangement.
To the extent the joint arrangement provides the Group with rights to the assets and obligations for the liabilities relating to the
arrangement, the arrangement is a joint operation. To the extent the joint arrangement provides the Group with rights to the net
assets of the arrangement, the arrangement is a joint venture.
a)
Joint operations
The Group recognises in relation to its interest in a joint operation,
(i)
its share of any asset held jointly;
(ii)
its share of any liabilities incurred jointly;
(iii)
its share of the revenue of the joint operation; and
(iv)
its share of any expenses incurred jointly.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
Hock Lian Seng Holdings Limited
Annual report 2014
50
