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REPORTS
4 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
4.1 Consolidation (cont’d)
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 Stapled 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 or the statement
of total return (as the case may be).
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.
Property acquisitions and business combinations
At the time of acquisition, the Stapled Group considers whether each acquisition represents an acquisition
of business or an acquisition of an asset. An acquisition is accounted for as a business combination where an
integrated set of activities is acquired, in addition to the property. In determining whether an integrated set of
activities is acquired, the HBT Trustee-Manager and the H-REIT Manager consider whether significant processes
such as strategic management and operational processes, are acquired. Where significant processes are acquired,
the acquisition is considered an acquisition of business and accounted for as stated above. Where the acquisition
does not represent a business, it is accounted for as an acquisition of a group of assets and liabilities. The cost of
acquisition is allocated to the assets and liabilities acquired and no goodwill or deferred tax is recognised.
Subsidiaries
Subsidiaries are entities either controlled by the HBT Group or the H-REIT Group. The HBT Group and the H-REIT
Group control an entity when they are exposed to or has rights to, variable returns from their involvement with the
entity and have the ability to affect those returns through their power over the entity. 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 of the
HBT Group, the H-REIT Group and the Stapled Group, where appropriate.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements of the HBT Group, the H-REIT Group and the
Stapled Group.
NOTES TO THE FINANCIAL STATEMENTS
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