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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
1
/ China Communications Services Corporation Limited
2
Significant accounting policies
(continued)
(b) Basis of preparation of the financial statements
The consolidated financial statements for the year ended 31 December 2011 comprise the Group and
its interests in associates.
The financial statements have been prepared on the historical cost basis, except for the following
material items in the balance sheet:
–
Other investments listed in active market are measured at fair value.
–
Liabilities for cash-settled share-based payment arrangements are measured at fair value.
The accounting policies have been consistently applied by the Group and are consistent with those used
in the previous year, except for the changes in accounting policies set out in note 3.
The preparation of financial statements in conformity with IFRSs requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and reported
amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future
periods.
Judgements made by management in the application of IFRSs that have significant effect on the
financial statements and major sources of estimation uncertainty are discussed in note 44.
(c) Basis of consolidation
(i)
Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination
in which all of the combining enterprises are ultimately controlled by the same party or parties
both before and after the business combination, and that control is not transitory. The assets
and liabilities obtained are measured at the carrying amounts as recorded by the enterprise
being combined at the combination date. The difference between the carrying amount of the
net assets obtained and the carrying amount of consideration paid for the combination (or
the total face value of shares issued) is adjusted to share premium in the capital reserve. If
the balance of share premium is insufficient, any excess is adjusted to retained earnings. The
combination date is the date on which one combining enterprise effectively obtains control of
the other combining enterprises.