LensCrafters 2011 Annual Report Download - page 184

ANNUAL REPORT 2011> 108 |
CONSOLIDATION PRINCIPLES
Subsidiaries
Subsidiaries are any entities over which the Group has the power to govern the financial
and operating policies (as defined by IAS 27 – Consolidated and Separate Financial
Statements), generally with an ownership 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
deconsolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is measured as the fair
value of the assets transferred, the liabilities incurred and the equity interests issued by the
Group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date. On
an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in
the acquiree either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest
in the acquiree and the acquisition date fair value of any previous equity interest in the
acquiree over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary
acquired in the case of a bargain purchase, the difference is recognized directly in the
consolidated statement of income.
In business combinations achieved in stages, the Group remeasures its previously held
equity interest in the acquiree at its acquisition date fair value and recognizes the resulting
gain or loss, if any, in profit and loss, within the operating income in consideration of the
Group strategy to continue growing through acquisitions.
Inter-company transactions, balances and unrealized gains and losses on transactions
between Group companies are eliminated. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
The individual financial statements used in the preparation of the consolidated financial
statements are prepared and approved by the administrative bodies of the individual
companies.
Transactions with non-controlling interests
Transactions with non-controlling interests are treated as transactions with equity owners
of the Group. For purchases from non-controlling interests, the difference between any
consideration paid and the relevant share acquired of the carrying value of net assets
1. CONSOLIDATION
PRINCIPLES,
CONSOLIDATION
AREA AND
SIGNIFICANT
ACCOUNTING
POLICIES