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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
For business combination prior to 1 January 2010, the following key
• 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
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
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.
- Spring '14