Huawei 2013 Annual Report Download - page 60

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Notes to the Consolidated Financial Statements Summary
The results of foreign operations in
hyperinflationary economies are translated
to CNY at the exchange rates ruling at
the end of the reporting period. 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 currencies. The restatement is
based on relevant price indices at the end
of the reporting period.
When a foreign operation is disposed of in
its entirety or partially such that control,
significant influence or joint control is lost,
the cumulative amount in the exchange
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 a 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 and goodwill
The Group accounts for business
combinations using the acquisition method
when control is transferred to the Group
(see note 1(e)). The consideration transferred
in the acquisition is generally measured at
fair value, as are the identifiable net assets
acquired. Transaction costs are expensed
as incurred.
The consideration transferred does not
include amounts related to the settlement
of pre-existing relationships. Such amounts
generally are recognised in profit or loss.
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.
Goodwill arising on a business combination
represents the excess of:
(i) the aggregate of the fair value of
the consideration transferred, the
recognised amount of any non-
controlling interests in the acquiree and
the fair value of the Group’s previously
held equity interest in the acquiree; over
(ii) the net fair value of the acquiree’s
identifiable assets acquired and liabilities
assumed as at the acquisition date.
When (ii) is greater than (i), then this excess
is recognised immediately in profit or loss
as a gain on a bargain purchase.
Goodwill is stated at cost less accumulated
impairment losses (see note 1(l)). Goodwill
is allocated to each cash-generating unit,
or groups of cash generating units, that is
expected to benefit from the synergies of
the combination and is tested annually for
impairment (see note 1(l)).