China Communications Services Corporation Limited Annual Report 2015
108
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
2. SIGNIFICANT ACCOUNTING POLICIES
(continued)
(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 profit or loss as a gain on a bargain
purchase after reassessment.
Goodwill is stated 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, which 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.
(e) Investments in debt and equity securities
The Group’s policies for investments in debt and equity securities, other than investments in subsidiaries and
associate, are as follows:
Investments in debt and equity securities are initially stated at fair value, which is their transaction price unless fair
value can be more reliably estimated using valuation techniques whose variables include only data from observable
markets. Cost includes attributable transaction costs. These investments are subsequently accounted for as follows,
depending on their classification:
Investments in equity securities that do not have a quoted market price in an active market and whose fair value
cannot be reliably measured are recognised in the consolidated statement of financial position at cost less impairment
losses (see note 2(l)).
Investments in securities which do not fall into the above category are classified as available-for-sale securities carried
at fair value. At each end of the reporting period the fair value is re-measured, with any resultant gain or loss being
recognised in other comprehensive income and accumulated separately in equity in the fair value reserve, except
foreign exchange gains and losses resulting from changes in the amortised cost of monetary items such as debt
securities which are recognised directly in profit or loss. Dividend income from equity investments is recognised in
profit or loss in accordance with the policy set out in note 2(w)(v) and, where these investments are interest-bearing,
interest calculated using the effective interest method is recognised in profit or loss in accordance with the policy set
out in note 2(w)(vi). When these investments are derecognised or impaired (see note 2(l)), the cumulative gain or loss
is reclassified from equity to profit or loss.
Investments are recognised/derecognised on the date the Group commits to purchase/sell the investments.
