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Notes to the financial statements
31 December 2012
(continued)
Annual Report 2012 KPJ Healthcare Berhad
2. Summary of significant accounting policies (continued)
2.5 Business combinations (continued)
If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting
gain or loss is recognised in profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified
as an asset or liability that is a financial instrument and within the scope of MFRS 39 Financial Instruments: Recognition and Measurement, is measured
at fair value with changes in fair value recognised either in either profit or loss or as a change to other comprehensive income. If the contingent
consideration is not within the scope of MFRS 39, it is measured in accordance with the appropriate MFRS. Contingent consideration that is classified
as equity is not remeasured and subsequent settlement is accounted for within equity.
Business combinations involving entities under common control are accounted for by applying the merger method. The assets and liabilities of the
coming entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. Any
difference between the consideration paid and the share capital of the ‘acquired’ entity is reflected within equity as merger reserve/deficit. The profit
or loss reflect the results of the coming entities for the full year, irrespective of when the combination takes place. Comparatives are presented if the
entities had always been comed since the date the entities had come under common control.
2.6 Foreign currency
(a) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which
the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the
Company’s functional currency.
(b) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on
initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign
currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary
items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was
determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit
or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are
recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency
translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the
differences arising on the translation of non-monetary items in respect of which gains and losses are recognised as other comprehensive income.
Exchange differences arising from such non-monetary items are also recognised as other comprehensive income.
(c) Foreign operations
The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses
are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other
comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated
in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations
and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.