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FINANCIAL STATEMENTS
Axiata Group Berhad | Annual Report 2016
133
3.
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies in the preparation of these financial statements are set out below:
(a) Economic entities in the Group
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered
only if the rights are substantive when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date
that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition
of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity
interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired, liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group
recognises any NCI in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the NCI’s proportionate share of the
recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the carrying amount of the acquirer’s previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date, any gains or losses arising from such re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139
either in profit or loss or as a change to OCI. Contingent consideration that is classified as equity is not remeasured, and its subsequent
settlement is accounted for within equity.
The excess of the consideration transferred by the Group, the amount of any NCI in the acquiree and the acquisition-date fair value of
any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the
total of consideration transferred, NCI recognised and previously held interest measured is less than the fair value of the net assets of
the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the profit or loss. The accounting policy
of goodwill is stated in Note 3(b)(i) to the financial statements. Goodwill is carried at cost less accumulated impairment losses, if any.
Under the predecessor method of merger accounting, the results of subsidiaries are presented as if the merger had been effected
throughout the current and previous years. The assets and liabilities combined are accounted for based on the carrying amounts from
the perspective of the common control shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled with
the values of the shares received. Any resulting credit difference is classified as equity and regarded as a non-distributable reserve. Any
resulting debit difference is adjusted against any suitable reserve. Any share premium, capital redemption reserve and any other reserves
which are attributable to share capital of the merged enterprises, to the extent that they have not been capitalised by a debit difference,
are reclassified and presented as movement in other capital reserves.
Inter-company transactions, balances and unrealised gains on transactions between the Group’s companies are eliminated. Profits and
losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
(ii) Changes in ownership interests in subsidiaries without change of control
Transactions with NCIs that do not result in loss of control are accounted for as transactions with equity owners of the Group. A change
in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests (“NCI”) to
reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to NCI and any consideration paid
or received is recognised in equity attributable to owners of the Company.