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Food Empire Holdings Limited Annual Report 2013
76
2. Summary of significant accounting policies (cont’d)
2.4
Basis of consolidation and business combination (cont’d)
(b) Business combinations
Business combinations from 1 January 2010
Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in
a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as
expenses in the periods in which the costs are incurred and the services are received.
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 and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance
with FRS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as
equity, it is not remeasured until it is finally settled within equity.
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.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that are present
ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation, is recognised on
the acquisition date 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 are measured at their acquisition date fair value, unless another measurement basis is
required by another FRS.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of 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 net fair
value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note
2.11(a). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or
loss on the acquisition date.
notes to the financial statements
For the year ended 31 December 2013