China Communications Services Corporation Limited Annual Report 2015
107
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
2. SIGNIFICANT ACCOUNTING POLICIES
(continued)
(c) Basis of consolidation
(continued)
(iii) Subsidiaries and non-controlling interests
(continued)
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Changes in the Group’s ownership interests in existing subsidiaries that do not result in the Group losing
control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s
interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the
subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the
fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the
Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as
the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income
in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or
liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as
specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at
the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under
IAS 39 Financial Instruments: Recognition and Measurement, or when applicable, the cost on initial recognition
of an investment in an associate or a joint venture.
(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.
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, after reassessment). 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 note 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 statement of profit or loss, 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 profit or loss and other 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 profit or loss.
When the Group reduces its ownership interest in an associate but the Group continues to use the equity
method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been
recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss
would be reclassified to profit or loss on the disposal of the related assets or liabilities.
