notes to the financial statements - Investor Relations

CWT Limited
60
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2011
2 BASIS OF PREPARATION (CONT’D)
2.5 Changes in Accounting Policies (cont’d)
Overview (cont’d)
Identification of related party relationships and related party disclosures
From 1 January 2011, the Group applied the revised FRS 24 Related Party Disclosures (2010) to identify parties that are
related to the Group and to determine the disclosures to be made on transactions and outstanding balances, including
commitments, between the Group and its related parties. FRS 24 (2010) improved the definition of a related party in order
to eliminate inconsistencies and ensure symmetrical identification of relationships between two parties.
FRS 24 (2010) requires disclosure of transactions in all direct relationships involving control, joint control or significant influence
and excludes the need to disclose transactions between two entities in which a person has significant influence over one
entity, and a close family member of that person has significant influence over the other entity. Transactions and outstanding
balances, including commitments, with these related parties for the current and comparative years have been disclosed
accordingly in note 44 to the financial statements.
The adoption of FRS 24 (2010) affects only the disclosures made in the financial statements. There is no financial effect on
the results and financial position of the Group for the current and previous financial years. Accordingly, the adoption of FRS
24 (2010) has no impact on earnings per share.
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements and
have been applied consistently by Group entities, except as explained in note 2.5, which addresses changes in accounting
policies.
3.1 Basis of consolidation
Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which
control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are
currently exercisable.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts
are generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs
in connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is
classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the
fair value of the contingent consideration are recognised in profit or loss.
For non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the
acquiree’s net assets in the event of liquidation, the Group elects on a transaction-by-transaction basis whether to measure
them at fair value, or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s
identifiable net assets, at the acquisition date. All other non-controlling interests are measured at acquisition-date fair value
or, when applicable, on the basis specified in another standard.