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ANNUAL REPORT 2014
2 BASIS OF PREPARATION (CONT’D)
2.4 Use of estimates and judgements (cont'd)
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in any future periods effected.
Information about critical judgements in applying accounting policies and assumptions and estimation
uncertainties that have the most significant effect on the amounts recognised in the financial statements are
described in the following notes:
• Note 5 – Valuation of investment properties
• Note 27 – Valuation of financial instruments
3 SIGNIFICANT ACCOUNTING POLICIES
The Stapled Group has adopted all the new and revised standards and interpretations of FRS (INT FRS) to the
extent that they are relevant to the Stapled Group. As a result of the adoption of FRS 110
Consolidated Financial
Statements
, the Stapled Group is required to change its accounting policy for determining whether it has control
over and consequently consolidates its investees. FRS 110 introduces a new control model that focuses on whether
the Stapled Group has power over an investee, exposure or rights to variable returns from its involvement with
the investee and ability to use its power to affect those returns. The Stapled Group’s control conclusion remains
unchanged on adoption of the standard.
Other than the above, the accounting policies set out below have been applied by the HBT Group, the H-REIT
Group and the Stapled Group consistently to all periods presented in these financial statements.
3.1 Consolidation
Stapling
Where entities enter into a stapling arrangement, the stapling arrangement is accounted for as a business
combination under the acquisition method.
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.
The Stapled Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
•
the recognised amount of any non-controlling interest in the acquiree; plus
•
if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the
acquiree, over the net recognised amount (generally fair value) of the identifiable assets acquired and
liabilities assumed. Any goodwill that arises is tested annually for impairment.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that
the Stapled Group incurs in connection with a business combination are expensed as incurred.
NOTES TO THE FINANCIAL STATEMENTS
