Baker Technology LimitedAnnual Report 2014
83
2.
Summary of significant accountingpolicies (cont’d)
2.3
Basis of consolidation andbusiness combination (cont’d)
(b)
Business combinations andgoodwill (cont’d)
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances andpertinent conditions as at the acquisitiondate. This includes the separationof
embeddedderivatives inhost contracts by the acquiree.
Any contingent consideration tobe transferredby the acquirer will be recognised at fair value at
the acquisitiondate. Subsequent changes to the fair valueof the contingent considerationwhich
is deemed tobe an asset or liability, will be recognised inprofit or loss.
TheGroupelects foreach individual businesscombination,whethernon-controlling interest in the
acquiree (if any), that arepresent ownership interests and entitle their holders to a proportionate
shareof net assets in the events of liquidation, is recognisedon the acquisitiondate at fair value,
or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
Other components of non-controlling interests aremeasured at their acquisition date fair value,
unless anothermeasurement basis is requiredby another FRS.
Anyexcessofthesumofthefairvalueoftheconsiderationtransferred inthebusinesscombination,the
amountofnon-controlling interest in theacquiree (ifany), and the fair valueof theGroup’spreviously
heldequity interest in theacquiree (if any), over thenet fair valueof theacquiree’s identifiableassets
and liabilities is recordedasgoodwill. In instanceswhere the latter amount exceeds the former, the
excess is recognisedasgainonbargainpurchase inprofit or losson theacquisitiondate.
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost
less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisitiondate, allocated to theGroup’s cash-generatingunits that areexpected tobenefit from
the synergiesof the combination, irrespectiveof whether other assetsor liabilitiesof theacquiree
are assigned to thoseunits.
Thecash-generatingunits towhichgoodwill havebeenallocated is tested for impairment annually
or whenever there is an indication that the cash-generating unit may be impaired. Impairment is
determined for goodwill by assessing the recoverable amount of each cash-generating unit (or
group of cash-generating units) to which the goodwill relates. Where the recoverable amount
of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in
profit or loss. Impairment losses recognised for goodwill arenot reversed in subsequent periods.
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31December 2014
