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Fima Corporation Berhad
(21185-P)
financial statements
102
NOTES TO THE FINANCIAL STATEMENTS
2.
SIGNIFICANT ACCOUNTING POLICIES (Cont’d.)
2.3 Summary of Significant Accounting Policies (Cont’d.)
(a) Basis of Consolidation (Cont’d.)
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 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 FRS 139 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 FRS 139, it is
measured in accordance with the appropriate FRS.
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 2.3(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
(iii)
The ability to use its power over the investee to affect its returns.
In the Company’s separate financial statements, investments in subsidiary companies are accounted for at cost less
impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying
amounts is included in profit or loss.