NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2014
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.5 BASIS OF CONSOLIDATION AND BUSINESS COMBINATIONS (CONT’D)
B)
Business combinations and goodwill
Business combination from 1 January 2010
Business combinations are accounted for by applying the acquisitionmethod. 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.
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 profit or loss.
The Group elects for each individual business combination, whether the 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 the 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. In instances where the latter amounts exceed the former, the excess is recognised as gain on bargain
purchase in profit or loss on the acquisition date.
Business combinations prior to 1 January 2010
In comparison to the above mentioned requirements, the following differences applied:
Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to
the acquisition formed part of the acquisition costs. The non-controlling interest was measured at the proportionate
share of the acquiree’s identifiable net assets.
Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values
relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired
share of interest did not affect previously recognised goodwill.
Where the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were
not reassessed on acquisition unless the business combination results in a change in the terms of the contract that
significantly modifies the cash flows that otherwise would have been required under the contract.
Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow
was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent
consideration were recognised as part of goodwill.
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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2014
