Lenovo 2010 Annual Report Download - page 81

2009/10 Annual Report Lenovo Group Limited
79
2009/10 Annual Report Lenovo Group Limited
79
1 Basis of preparation (continued)
– Future billing adjustments of US$374,586,000 at March 31, 2010 (2009: US$313,364,000) previously netted with
trade and notes receivables have been reclassified to other payables
– Amounts receivable from and payable to subcontracting vendors of US$1,043,498,000 and US$959,082,000 (2009:
US$421,017,000 and US$355,996,000) previously included in trade receivables and trade payables have been
reclassified to other receivables and other payables respectively
Management considered the current classifications are more appropriate and consistent with industry practice.
Comparative information has been reclassified to conform to the current period’s presentation.
A consolidated balance sheet as at March 31, 2008 with balances reclassified mentioned above is presented for
reference.
2 Significant accounting policies
The significant accounting policies adopted in the preparation of these financial statements are set out below:
(a) Basis of consolidation
(i) The consolidated financial statements include the financial statements of the Company and all of its subsidiaries
made up to March 31.
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern
the financial and operating policies generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The
cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess
of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill (Note 2(f)(i)). If the cost of acquisition is less than the fair value of the net assets of the
subsidiary acquired, the difference is recognized directly in the income statement.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
(ii) Inter-company transactions, balances and unrealized gains on transactions between group companies are
eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
(iii) In the Company’s balance sheet, the investments in subsidiaries are stated at cost less provision for impairment
losses. The results of subsidiaries are accounted for by the Company on the basis of dividends received and
receivable.
(b) Associated companies
(i) An associated company is an entity, not being a subsidiary or a joint venture, in which an equity interest is
held for the long-term and significant influence, but not control, is exercised in its management, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Interests in associated companies
are accounted for using the equity method of accounting and are initially recognized at cost. The Group’s
interests in associated companies include goodwill identified on acquisition, net of any accumulated impairment
loss. See note 2(g) for the impairment of non-financial assets including goodwill.