Notes to the Consolidated Financial Statements
Annual improvements 2011 – These
annual improvements, address six
issues in the 2009-2011 reporting
cycle. Effective date 1 January
2013. They include changes to:
IFRS 1, ‘First time adoption’
IAS 1, ‘Financial statement
presentation’
IAS 16, ‘Property, plant and
equipment’
IAS 32, ‘Financial instruments;
Presentation’
IAS 34, ‘Interim financial reporting’
Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including
special purpose entities) over
which the Group has the power to
govern the financial and operating
policies generally accompanying a
shareholding of more than one half
of the voting rights. The existence
and effect of potential voting rights
that are currently exercisable or
convertible are considered when
assessing whether the Group controls
another entity. Subsidiaries are fully
consolidated from the date on which
control is transferred to the Group.
They are de-consolidated from the
date on which control ceases.
The purchase method of accounting
is used to account for the acquisition
of subsidiaries by the Group. The
cost of an acquisition is measured
as the fair value of the assets given,
equity instruments issued and
liabilities incurred or assumed at the
date of exchange, plus costs directly
attributable to the acquisition.
Identifiable assets acquired and
liabilities and contingent liabilities
assumed in a business combination
are measured initially at their fair
values at the acquisition date,
irrespective of the extent of any non-
controlling interest. The excess of
the cost of acquisition over the fair
value of the Group’s share of the
identifiable net assets acquired is
recorded as goodwill. If the cost of
acquisition is less than the fair value
of the net assets of the subsidiary
acquired, the difference is recognised
directly in the consolidated statement
of income.
Intercompany
transactions,
balances and unrealised gains
on transactions between group
companies are eliminated. Unrealised
losses are also eliminated unless
the transaction provides evidence
of an impairment of the asset
transferred. Subsidiaries’ accounting
policies have been changed where
necessary to ensure consistency with
the policies adopted by the Group.
Costs associated with the
restructuring of a subsidiary as a
part of the acquisition or subsequent
to the acquisition are included in the
consolidated statement of income
upon the date of commitment.
(b) Transactions and
(b)
non-controlling interests
The Group treats transactions
with non-controlling interests as
transactions with equity owners of
the Group. For purchases from non-
controlling interests, the difference
between any consideration paid and
the relevant share acquired of the
carrying value of net assets of the
subsidiary is recorded in equity.
Gains or losses on disposals to
non-controlling interests are also
recorded in equity.
When the Group ceases to have
control or significant influence, any
retained interest in the entity is
remeasured to its fair value, with
the change in carrying amount
recognised in profit or loss. The fair
value is the initial carrying amount
for the purposes of subsequently
accounting for the retained interest
as an associate, joint venture or
financial asset.
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.
If the ownership interest in
an associate is reduced but
significant influence is retained,
only a proportionate share of the
amounts previously recognised in
other comprehensive income are
reclassified to profit or loss where
appropriate.
(c) Associates
Associates are all entities over
which the Group has significant
influence but not control, generally
accompanying a shareholding of
between 20% and 50% of the
voting rights. Investments in
associates are accounted for by
the equity method of accounting
and are initially recognised at
cost. The Group’s investment in
associates includes goodwill (net of
any accumulated impairment loss)
identified on acquisition.
The Group’s share of its associates’
post-acquisition profits or losses
is recognised in the consolidated
statement of income, and its share
of post-acquisition movements in
reserves is recognised in reserves.
The cumulative post-acquisition
movements are adjusted against the
carrying amount of the investment.
When the Group’s share of losses in
an associate equals or exceeds its
interest in the associate, including
any other unsecured receivables,
the Group does not recognise
further losses, unless it has incurred
obligations or made payments on
behalf of the associate.
Unrealised gains on transactions
between the Group and its
associates are eliminated to the
extent of the Group’s interest in
the associates. Unrealised losses
are also eliminated unless the
transaction provides evidence of an
impairment of the asset transferred.
Accounts for associated companies
have been restated to conform
with Group accounting policies,
if necessary, except as otherwise
disclosed.
Where a subsidiary or an associated
company is acquired and held
exclusively with a view to its disposal
within the next twelve months, the
subsidiary or associated company
is classified as an investment held
for sale in the Group’s consolidated
financial statements.
Dilution gains and losses arising
in investments in associates are
recognised in the income statement.
20
Dar Al-Maal Al-Islami Trust
Annual Report 2012
