43
SUNMOON FOOD COMPANY LIMITED
ANNUAL REPORT 2015
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
2.3
Business combinations
(Continued)
Business combinations before 1 January 2010 (Continued)
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.
When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree
are 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 would otherwise be required under the contract.
Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic
outflow was probable and a reliable estimate was determinable. Subsequent measurements to the contingent
consideration affected goodwill.
2.4
Investment in associate
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but has no control or joint control
over those policies.
Investment in an associate is accounted for in the consolidated financial statements using the equity method
of accounting. An associate is equity accounted for from the date the Group obtains significant influence
until the date the Group ceases to have significant influence over the associate.
Investment in an associate is initially recognised at cost. The cost of an acquisition is measured at the fair
value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange,
plus costs directly attributable to the acquisition.
In applying the equity method of accounting, the Group’s share of its associate’s post-acquisition profits or
losses is recognised in profit or loss and its share of post-acquisition movements in reserves is recognised in
other comprehensive income. These post-acquisition movements are adjusted against the carrying amount
of the investments. When the Group’s share of losses in an associate equals or exceeds its interest in the
associate, including any other unsecured non-current receivables, the Group does not recognise further
losses, unless it has incurred legal or constructive obligations or has made payments on behalf of the
associate. If the associate subsequently reports profits, the Group resumes recognising its share of those
profits after its share of the profits equals the share of losses not recognised.
