Notestothefinancialstatements
For the financial year ended31December 2015
2.
Summaryof significant accountingpolicies (cont’d)
2.2
Standards issuedbut not yet effective (cont’d)
Except forFRS115andFRS109, thedirectorsexpect that theadoptionof theother standardsabovewill havenomaterial impact on the financial statements in
theperiodof initial application. Thenatureof the impending changes inaccountingpolicy onadoptionof FRS115andFRS109aredescribedbelow.
FRS115
Revenue fromContractswithCustomers
FRS115establishesa five-stepmodel thatwill apply to revenuearising fromcontractswithcustomers.UnderFRS115, revenue is recognisedat anamount that
reflects theconsiderationwhichanentityexpects tobeentitled inexchange for transferringgoodsorservices toacustomer. Theprinciples inFRS115providea
morestructuredapproach tomeasuringand recognising revenuewhen thepromisedgoodsandservicesare transferred to thecustomer i.e.whenperformance
obligationsare satisfied.
Key issues for the Group include identifying performance obligations, accounting for contractmodifications, applying the constraint to variable consideration,
evaluating significant financing components, measuring progress toward satisfaction of a performance obligation, recognising contract cost assets and
addressingdisclosure requirements.
Either a full ormodified retrospective application is required for annual periods beginningonor after 1 January 2018withearly adoptionpermitted. TheGroup
is currently assessing the impact of FRS115andplans toadopt thenew standardon the requiredeffectivedate.
FRS109
Financial Instruments
FRS 109 introduces new requirements for classification andmeasurement of financial assets, impairment of financial assets and hedge accounting. Financial
assetsareclassifiedaccording to theircontractual cash flowcharacteristicsand thebusinessmodelunderwhich theyareheld. The impairment requirements in
FRS109arebasedonanexpectedcredit lossmodel and replace theFRS39 incurred lossmodel. Adopting theexpectedcredit losses requirementswill require
theCompany tomake changes to its current systemsandprocesses.
TheGroup currentlymeasures its investments in unquoted equity securities at cost. Under FRS 109, theGroupwill be required tomeasure the investment at
fair value. Any differencebetween theprevious carryingamount and the fair valuewouldbe recognised in theopening retainedearningswhen theGroupapply
FRS109.
FRS109 iseffective forannualperiodsbeginningonorafter1January2018withearlyapplicationpermitted.Retrospectiveapplication isrequired,butcomparative
information isnot compulsory. TheGroup is currently assessing the impact of FRS109andplans toadopt the standardon the requiredeffectivedate.
2.
Summaryof significant accountingpolicies (cont’d)
2.3
Basisof consolidationandbusinesscombination
(a)
Basisof consolidation
The consolidated financial statements comprise the financial statements of theCompany and its subsidiaries as at the end of the reporting period. The
financial statementsof the subsidiariesused in thepreparationof the consolidated financial statementsareprepared for the same reportingdateas the
Company. Consistent accountingpoliciesareapplied to like transactionsandevents in similar circumstances.
All intra-groupbalances, incomeandexpensesandunrealisedgainsand losses resulting from intra-group transactionsanddividendsareeliminated in full.
Subsidiaries are consolidated from the date of acquisition, being the date onwhich theGroup obtains control, and continue to be consolidated until the
date that such control ceases.
Losseswithina subsidiary areattributed to thenon-controlling interest even if that results inadeficit balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If theGroup loses control over a
subsidiary, it:
– De-recognises theassets (includinggoodwill) and liabilitiesof the subsidiary at their carryingamountsat thedatewhen control is lost;
– De-recognises the carryingamount of anynon-controlling interest;
– De-recognises the cumulative translationdifferences recorded inequity;
– Recognises the fair valueof the consideration received;
– Recognises the fair valueof any investment retained;
– Recognisesany surplusor deficit inprofit or loss;
– Re-classifies the Group’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings,
asappropriate.
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BAKERTECHNOLOGYlimited
ANNUAL REPORT 2015
