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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
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/ China Communications Services Corporation Limited
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Significant accounting policies
(continued)
(c) Basis of consolidation
(continued)
(iv) Associates
Associates are entities in which the Group has significant influence, but not control or joint
control, over its management, including participation in the financial and operating decisions.
Investments in associates are accounted for in the consolidated financial statements under
the equity method, unless it is classified as held for sale (or included in a disposal group that
is classified as held for sale). Under the equity method, the investments are initially recorded
at cost, adjusted for any excess of the Group’s share of the acquisition-date fair values of
the investees’ identifiable net assets over the cost of the investment (if any). Thereafter, the
investment is adjusted for the post acquisition change in the Group’s share of the investee’s
net assets and any impairment loss relating to the investment (see notes 2(d) and 2(l)). Any
acquisition-date excess over cost, the Group’s share of the post-acquisition, post-tax results of
the investees and any impairment losses for the year are recognised in the consolidated income
statement, whereas the Group’s share of the post-acquisition post – tax items of the investees’
other comprehensive income is recognised in the consolidated statement of comprehensive
income.
When the Group’s share of losses exceeds its interest in the associate, the Group’s interest
is reduced to nil and recognition of further losses is discontinued except to the extent that
the Group has incurred legal or constructive obligations or made payments on behalf of the
investee. For this purpose, the Group’s interest is the carrying amount of the investment under
the equity method together with the Group’s long-term interests that in substance form part of
the Group’s net investment in the associate.
Unrealised profits and losses resulting from transactions between the Group and its associates
are eliminated to the extent of the Group’s interest in the investee, except where unrealised
losses provide evidence of an impairment of the asset transferred, in which case they are
recognised immediately in the consolidated income statement.
(d) Goodwill
Goodwill represents the excess of
(i)
the aggregate of the fair value of the consideration transferred, the amount of any non-
controlling interest 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 and liabilities measured as at the
acquisition date.
When (ii) is greater than (i), then this excess is recognised immediately in income statement as a gain
on a bargain purchase.
Goodwill is state at cost less accumulated impairment losses. Goodwill arising on a business
combination 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 2(l)).
On disposal of a cash-generating unit during the year, any attributable amount of purchased goodwill is
included in the calculation of the profit or loss on disposal.