Huawei 2014 Annual Report Download - page 66

64 Huawei Investment & Holding Co., Ltd. 2014 Annual Report
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)).
(e) Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the
Group. The Group controls an entity when it is
exposed, or has rights, to variable returns from
its involvement with the entity and has the ability
to affect those returns through its power over
the entity. When assessing whether the Group
has power, only substantive rights (held by the
Group and other parties) are considered.
An investment in a subsidiary is consolidated into
the consolidated financial statements from the
date that control commences until the date that
control ceases. Intra-group balances, transactions
and cash flows and any unrealised profits arising