Annual Report Gorenje Group 2009

A contingent liability of the acquiree is assumed in a business combination only if such a liability
represents a present obligation and arises from a past event, and its fair value can be measured
reliably.
The Group measures any non-controlling interest at its proportionate interest in the identifiable net
assets of the acquiree.
Transaction costs that the Group incurs in connection with a business combination, such as finder’s
fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as
incurred.
(iii) Accounting for acquisitions of non-controlling interests
The Group has adopted early IFRS 3 Business Combinations (2008) and IAS 27 Consolidated and
Separate Financial Statements (2008) for acquisitions of non-controlling interests occurring in the
financial year starting 1 January 2009. Under the new accounting policy, acquisitions of non-controlling
interests are accounted for as transactions with equity holders in their capacity as equity holders and
therefore no goodwill is recognised as a result of such transactions. Previously, goodwill was
recognised arising on the acquisition of a non-controlling interest in a subsidiary; and that represented
the excess of the cost of the additional investment over the carrying amount of the interest in the net
assets acquired at the date of exchange. The change in accounting policy was applied prospectively
and had no material impact on earnings per share.
(iv) Accounting for borrowing costs
In respect of borrowing costs relating to qualifying assets for which the commencement date for
capitalisation is on or after 1 January 2009, the Group capitalises borrowing costs directly attributable
to the acquisition, construction or production of a qualifying asset as part of the cost of that asset.
Previously the Group immediately recognised all borrowing costs as an expense. This change in
accounting policy was due to the adoption of IAS 23 Borrowing Costs (2007) in accordance with the
transitional provisions of such standard; comparative figures have not been restated. The change in
accounting policy had no material impact on earnings per share. The Group has capitalised borrowing
costs with respect to property, plant and equipment under construction (see note 3(d)(i)) and
development costs (see note 3(e)(ii)).
(v) Determination and presentation of operating segments
As of 1 January 2009 the Group determines and presents operating segments based on the
information that internally is provided to the CEO, who is the Group’s chief operating decision maker.
This change in accounting policy is due to the adoption of IFRS 8 Operating Segments. Previously
operating segments were determined and presented in accordance with IAS 14 Segment Reporting.
The new accounting policy in respect of segment operating disclosures is presented as follows.
Comparative segment information has been re-presented in conformity with the transitional
requirements of such standard. Since the change in accounting policy only impacts presentation and
disclosure aspects, there is no impact on earnings per share.
An operating segment is a component of the Group that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions
with any of the Group’s other components. An operating segment’s operating results are reviewed
regularly by the CEO to make decisions about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is available. Segment results that are
reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the
period to acquire property, plant and equipment, and intangible assets other than goodwill.
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Annual Report Gorenje Group 2009