KIM HENG OFFSHORE & MARINE HOLDINGS LIMITED
ANNUAL REPORT 2014
62
NOTES
TO THE FINANCIAL STATEMENTS
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
(i)
Business combinations
Business combinations are accounted for using the acquisition method in accordance with FRS
103
Business Combination
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.
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.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until
the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group.
(iii) Acquisitions from entities under common control
Business combinations arising from transfers of interests in entities that are under the control
of the shareholder that controls the Group are accounted for as if the acquisition had occurred
at the beginning of the earliest comparative year presented or, if later, at the date that common
control was established. For this purpose, comparatives are restated. The assets and liabilities
acquired are recognised at the carrying amounts recognised previously in the Group controlling
shareholder’s consolidated financial statements. The components of equity of the acquired
entities are added to the same components within Group equity. Any excess or deficiency
of the nominal value of the shares acquired is taken to the shareholder’s equity as a merger
reserve or deficit.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements.
(v) Subsidiaries in the separate financial statements
Investments in subsidiaries are stated in the Company’s statement of financial position at cost
less accumulated impairment losses.
