Page 64 - Forterra

62 FORTERRA
ANNUAL REPORT 2012
NOTES TO THE
FINANCIAL STATEMENTS
2 BASIS OF PREPARATION (CONTINUED)
(e) Changes in accounting policy
During the year, the Group applied the amendments to FRS 12 Income Tax – Deferred Tax:
Recovery of underlying assets, which became effective as of 1 January 2012. The amendments
apply to the measurement of deferred tax liabilities and assets arising from investment
properties measured using the fair value model under FRS 40 Investment Property. Under
FRS 12 deferred tax is required to be measured with reference to the tax consequences that
would follow from the manner in which the entity expects to recover the carrying amount of
the asset(s) in question. In this regard, the amendments to FRS 12 introduced a rebuttable
presumption that the carrying amount of investment property carried at fair value under
FRS 40 Investment Property will be recovered through sale. This presumption is rebutted
on a property-by-property basis if the investment property in question is depreciable and is
held within a business model whose objective is to consume substantially all of the economic
benefits embodied in the investment property over time, rather than through sale. The
adoption of amendments to FRS 12 does not have any significant impact on the financial
position or performance of the Group.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently by the Group to all periods
presented in these financial statements and have been applied consistently by the entities in the
Group, except as explained in Note 2(e), which addresses changes in accounting policies.
(a) Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method as at the
acquisition date, which is the date on which control is transferred to the Group. Control
is the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, the Group takes into consideration
potential voting rights that are currently exercisable.
The Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the existing
equity interest in the acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired
and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in
profit or loss.
The consideration transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts are generally recognised in profit or loss.