For business combination prior to 1 january 2010 the

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Unformatted text preview: siness combination, the excess is recognised in the income statement immediately. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised either in the income statement or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity. If the business combination is achieved in stages, the fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through the income statement. For business combination prior to 1 January 2010, the following key differences apply: • Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interests were measured at the proportionate share of the acquiree’s identifiable net assets. • Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill. Business combinations prior to 1 January 2010 have not been restated. Investments in associated companies An associated company is an entity over which the Group has significant influence and that is not a subsidiary or a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but without the ability to have control over those policies. Significant influence normally exists when the Group has 20% to 50% voting power through ownership or agreements. The results and assets and liabilities of associated companies are incorporated using the equity method of accounting. under the equity method, investments in associated companies are carried in the consolidated statement of financial position at cost and adjusted for post-acquisition changes in the Group’s share of the net assets of the associated companies (i.e. comprehensive income and equity adjustments), less any impairment in the value of the investments. Adjustments are made where necessary to bring the accounting policies in line with those of the Group. Losses in associated companies in excess of the Group’s interest in such companies, including any long-term loans and receivables that, in substance, form part of the Group’s net investment in the associated companies are not recognised unless the Group has incurred legal or constructive obligations or made payments on behalf of these associated companies. Any goodwill is included in the carrying amount of the investment and is assessed for impairment as part of the investment. At each reporting date the Group evaluates if there are identified indications that the investment may be impaired. If there are such indications, the recoverable amount of the investment is estimated in order to determine the extent of the impairment loss (if any). Where a Group entity transacts with an associate of the Group, profits or losses are eliminated or deferred to the extent of the Group’s interest in the relevant associated company. The net result of associated companies, including amortisation of excess values, impairment losses, reversal of impairment losses and gains and losses on disposals, are presented at two separate line items in the income statement between operating profit (loss) and financial items. Gains and losses on disposals are presented separately. The share of other comprehensive income is recognised in the Group’s comprehensive income. Other equity adjustments in associated companies are recognised in the statement of changes in equity. /page 27/ telenor annual report 2011 notes to the financial statements / telenor group Financial statements as of the reporting date are for some associated companies not available before the Group issues its quarterly financial information. In such instances, the share of net income of the associate is recognised in the consolidated financial statements with a one quarter lag. Adjustments are made for the effects of publicly available information on significant transactions or events that occur between the latest interim financial reporting of the associated company and the date of these consolidated financial statements. To ensure consistency in reporting in quarterly and annual reports, the figures in the annual report are not updated in situations where the financial statements for the associated company are made available between the issuance of the quarterly report for the fourth quarter and the issuance of the annual report. Interests in joint ventures A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control. That is when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties...
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This document was uploaded on 03/21/2014.

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