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Notes to the
Financial Statements
As at 31 March 2020
Fima CORPORATION Berhad
(197401004110) (21185-P) •
Annual Report 2020
124
2.
Significant accounting policies (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)
(a) Basis of consolidation (cont’d.)
When theGroup loses control of a subsidiary company, a gainor loss calculatedas the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying
amount of the assets and liabilities of the subsidiary company and any non-controlling interest, is recognised in profit or
loss. The subsidiary company’s cumulative gain or loss which has been recognised in other comprehensive income and
accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The
fair value of any investment retained in the former subsidiary company at the date control is lost is regarded as the cost
on initial recognition of the investment.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as
the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-
controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the
non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable
net assets. Transaction costs incurred are expensed off and included in administrative expenses.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will
be recognised in accordance with MFRS 9 either in profit or loss or as a change to other comprehensive income. If the
contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for
within equity. In instances where the contingent consideration does not fall within the scope of MFRS 9, it is measured in
accordance with the appropriate MFRS.
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.
If the business combination is achieved in stages, the acquisition date of the acquirer’s previously held equity interest in
the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than fair value of the net assets of the subsidiary company acquired, the difference is recognised
in profit or loss. The accounting policy for goodwill is set out in Note 2.4(h).
(b) Subsidiaries
A subsidiary company is an entity over which the Group has the following:
(i)
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee);
(ii) Exposure, or rights, to variable returns from its investment with the investee; and