2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.5 Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as
the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-
controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the
non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable
net assets. Transaction costs incurred are expensed and included in administrative expenses.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be
recognised in accordance with MFRS 139 either in profit and loss or as a change to other comprehensive income. If the
contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within
equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in
accordance with the appropriate MFRS.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the
acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.
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.
Business combinations involving entities under common control are accounted for by applying the merger method. The
assets and liabilities of the combining 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 combining entities for the full year, irrespective of when the combination takes place. Comparatives are presented if
the entities had always been combined since the date the entities had come under common control.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit
and loss. The accounting policy for goodwill is disclosed in
Note 2.9(a)
.
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.
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Notes to the
Financial Statements
For the financial year ended 31 December 2014 (continued)
KPJ Healthcare Berhad annual report
2014
