NOTES TO THE FINANCIAL STATEMENTS
FOR THE FInAncIAL yEAR EnDED 30 JunE 2016
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
b)
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its
subsidiary companies at the end of the reporting period. Subsidiary companies are consolidated from
the date of acquisition, being the date which the Group obtains control, and continue to be consolidated
until the date that such control ceases.
The financial statements of the subsidiaries areprepared for the same reportingdate as theparent company.
Consistent accounting policies are applied for like transactions and events in similar circumstances.
Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full.
Profits and losses resulting from intragroup transactions that are recognised in assets, such as inventory
and property, plant and equipment, are eliminated in full.
Business combinations are accounted for using the acquisition method. The consideration transferred
for the acquisition comprises the fair value of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred also includes the fair value of any contingent
consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary
company. Acquisition-related costs are recognised as expenses as incurred. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date.
Any excess of the fair value of the consideration transferred in the business combination, the amount
of any non-controlling interest in the acquiree (if any) and the fair value of the Group’s previously held
equity interest in the acquiree (if any), over the fair value of the net identifiable assets acquired is recorded
as goodwill. Goodwill is accounted for in accordance with the accounting policy for goodwill stated in
Note 2(d). In instances where the latter amount exceeds the former, the excess is recognised as gain on
bargain purchase in profit or loss on the date of acquisition.
Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary
attributable to the interests which are not owned directly or indirectly by the equity holders of the
Company. They are shown separately in the consolidated statement of comprehensive income, statement
of changes in equity and statement of financial position. Total comprehensive income is attributed to the
non-controlling interests based on their respective interests in a subsidiary, even if this results in the non-
controlling interests having a deficit balance.
For non-controlling interests that are present ownership interests and entitle their holders to a
proportionate share of the acquiree’s net assets in the event of liquidation, the Group elects on an
acquisition-by-acquisition basis whether to measure them at fair value, or at the non-controlling
interests’ proportionate share of the acquiree’s net identifiable assets, at the acquisition date. All other
non-controlling interests are measured at acquisition-date fair value or, when applicable, on the basis
specified in another standard.
In business combinations achieved in stages, previously held equity interests in the acquiree are
remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit
or loss.
Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions (i.e. transactions with owners in their capacity as owners).
67
ISOTEAM LTD.
ANNUAL REPORT 2016
