Page 122 - Exim iar24_Ebook

EXIM BANK MALAYSIA
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NOTES TO THE FINANCIAL STATEMENTS

2. MATERIAL ACCOUNTING POLICY INFORMATION (cont’d)

2.4 Summary of material accounting policy information (cont’d)
(a) Subsidiaries and basis of consolidation (cont’d)

(ii) Basis of consolidation (cont’d)
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group
controls an investee if, and only if, the Group has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
• Exposure, or rights, to variable returns from its involvement with the investee; and
• The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption
and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement(s) with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
• The Group’s voting rights and potential voting rights.
The Group and the Bank re-assess whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains control until the date the Group ceases
to control the subsidiary.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group
transactions are eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date.

Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised
in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair
values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments
issued, plus any costs directly attributable to the business combination.
Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired
subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statements of
financial position. Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable
assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in
statement of profit or loss on the date of acquisition.

When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree
are reassessed on acquisition unless the business combination results in a change in the terms of the contract
that significantly modifies the cash flows that would otherwise be required under the contract.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control,
and continue to be consolidated until the date such control ceases.