NewWorld Development Company Limited
FINANCIAL SECTION
112
3 PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies adopted for the preparation of these consolidated financial statements, which have
been consistently applied to all the years presented, unless otherwise stated, are set out as below:
(a) Consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its
subsidiaries made up to 30 June.
(i) Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries
are consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group. The
consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred,
the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement at the acquisition date. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date. There is a choice, on the basis of each
acquisition to measure the non-controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the recognised amount of acquiree’s identifiable net assets.
If the business combination is achieved in stages, the acquirer’s previously held equity interest in the
acquiree is remeasured to fair value at the acquisition date through profit or loss.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree
and the fair value of any previous equity interest in the acquiree at the date of acquisition over the
fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this
consideration is less than the fair value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognised directly in the consolidated income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value
at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair
value is the carrying amount for the purposes of subsequently accounting for the retained interest as
associated companies, joint ventures or financial assets. In addition, any amounts previously recognised
in other comprehensive income in respect of that entity are accounted for as if the Group had directly
disposed of the related assets or liabilities. This may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
The Company’s interests in subsidiaries are stated at cost less provision for impairment losses. The
results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.
