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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
Annual Report 2011 /
1
2
Significant accounting policies
(continued)
(c) Basis of consolidation
(continued)
(ii)
Business combinations involving entities not under common control
A business combination involving entities not under common control is a business combination
in which all of the combining entities are not ultimately controlled by the same party or parties
both before and after the business combination.
The acquirer, at the acquisition date, allocates the cost of the business combination by
recognising the acquiree’s identifiable asset, liabilities and contingent liabilities at their fair value
at that date.
(iii) Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power
to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that presently are exercisable are taken
into account.
An investment in a subsidiary is consolidated into the consolidated financial statements from
the date that control commences until the date that control ceases. Intra-group balances and
transactions and any unrealised profits arising from intra-group transactions are eliminated in full
in preparing the consolidated financial statements. Unrealised losses resulting from intra-group
transactions are eliminated in the same way as unrealised gains but only to the extent that
there is no evidence of impairment.
Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly
to the company, and in respect of which the Group has not agreed any additional terms with
the holders of those interests which would result in the Group as a whole having a contractual
obligation in respect of those interests that meets the definition of a financial liability. For each
business combination, the group can elect to measure any non-controlling interests either at fair
value or at their proportionate share of the subsidiary’s net identifiable assets.
Non-controlling interests are presented in the consolidated balance sheet within equity,
separately from equity attributable to the equity shareholders of the Company. Non-controlling
interests in the results of the Group are presented on the face of the consolidated income
statement and the consolidated statement of comprehensive income as an allocation of the
total profit or loss and total comprehensive income for the year between non-controlling
interests and the equity shareholders of the Company.
Changes in the Group’s interests in a subsidiary that do not result in a loss of control are
accounted for as equity transactions, whereby adjustments are made to the amounts of
controlling and non-controlling interests within consolidated equity to reflect the change in
relative interests, but no adjustments are made to goodwill and no gain or loss is recognised.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire
interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss. Any
interest retained in that former subsidiary at the date when control is lost is recognised at fair
value and this amount is regarded as the fair value on initial recognition of a financial asset
or, when appropriate, the cost on initial recognition of an investment in an associate or jointly
controlled entity.
In the Company’s balance sheet, investments in subsidiaries are stated at cost less impairment
losses (see note 2(l)).