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FRASERS HOSPITALITY TRUST ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL PERIOD FROM 20 JUNE 2014 (DATE OF CONSTITUTION) TO 30 SEPTEMBER 2015
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.4 Basis of consolidation and business combinations (cont’d)
(d)
Business combinations
Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in
which the costs are incurred and the services are received.
When the Stapled Group acquires a business, it assesses the financial assets and liabilities assumed
for appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date.
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 in accordance with FRS 39 either in the Statements of Total
Return or as changes to other comprehensive income. If the contingent consideration is classified as
Stapled Securityholders’ Funds, it is not remeasured until it is finally settled within Stapled Securityholders’
Funds.
In business combinations achieved in stages, previously held equity interests in the acquiree are
remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in the
Statements of Total Return.
The Stapled Group elects for each individual business combination, whether non-controlling interest
in the acquiree (if any), that are present ownership interests and entitle their holders to a proportionate
share of net assets in event of liquidation, is recognised on the acquisition date at fair value, or at the non-
controlling interest’s proportionate share of the acquiree’s identifiable net assets. Other components of
non-controlling interests aremeasured on their acquisition date at fair value, unless another measurement
basis is required by another FRS.
Any excess of the sum of the fair value of the consideration transferred in the business combination,
the amount of non-controlling interest in the acquiree (if any), and the fair value of the Stapled Group’s
previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable
assets and liabilities is recorded as goodwill. Goodwill acquired in a business combination is initially
measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment
losses. In instances where the latter amount exceeds the former, the excess is recognised as gain on
bargain purchase in the Statements of Total Return on the acquisition date.
Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to
owners of the Trust and are presented separately in the Statements of Total Return and within the Stapled
Securityholders’ Funds in the Statements of Financial Position, separately from the Stapled Securityholders’
Funds attributable to Stapled Securityholders of the Trust. Changes in the Trust’s ownership interest in
a subsidiary that does not result in a loss of control are accounted for as transactions within Stapled
Securityholders’ Funds. In such circumstances, the carrying amounts of the controlling and non-
controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any
difference between the amount by which the non-controlling interest is adjusted and the fair value of the
consideration paid or received is recognised directly in Stapled Securityholders’ Funds and attributable to
Stapled Securityholders of the Trust.
