Huawei 2012 Annual Report Download - page 44

Consolidated Financial Statements Summary and Notes
41
The results of foreign operations in
hyperinflationary economies are translated
to CNY at the exchange rate ruling at the
balance sheet date. Prior to translating the
financial statements of foreign operations in
hyperinflationary economies, their financial
statements for the current year are restated
to account for changes in the general
purchasing power of the local currency.
The restatement is based on relevant price
indices at the balance sheet date.
When a foreign operation is disposed of
such that control, significant influence or
joint control is lost, the cumulative amount
in the translation reserve related to that
foreign operation is reclassified to profit or
loss as part of the gain or loss on disposal.
When the Group disposes of only part of
its interest in a subsidiary that includes a
foreign operation while retaining control,
the relevant proportion of the cumulative
amount is reattributed to non-controlling
interests. When the Group disposes of only
part of its investment in an associate or joint
venture that includes a foreign operation
while retaining significant influence or joint
control, the relevant proportion of the
cumulative amount is reclassified to profit
or loss.
(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 Group. Control is the power
to govern the financial and operating policies
of an entity so as to obtain benefits from its
activities. In assessing control, the Group takes
into consideration potential voting rights that
currently are exercisable.
The Group measures goodwill at the
acquisition date as:
■ the fair value of the consideration transferred;
plus
■ the recognised amount of any non-
controlling interests in the acquiree; plus
■ if the business combination is achieved in
stages, the fair value of the pre-existing
equity interest in the acquiree; less
■ the net recognised amount (generally fair
value) of the identifiable assets acquired
and liabilities assumed.
When the excess is negative, a bargain
purchase gain is recognised immediately in
profit or loss.
The consideration transferred does not
include amounts related to the settlement
of pre-existing relationships. Such amounts
generally are recognised in profit or loss.
Transactions costs, such as finder’s fee,
legal fees, due diligence fees, and other
professional and consulting fees, that the
Group incurs in connection with a business
combination are expensed as incurred.
Any contingent consideration payable is
measured at fair value at the acquisition
date. If the contingent consideration is
classified as equity, then it is not remeasured
and settlement is accounted for within
equity. Otherwise, subsequent changes in
the fair value of the contingent consideration
are recognised in profit or loss.