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Notes to the Consolidated Financial Statements

31st March 2018

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation (Continued)

(b) (Continued)

HKFRS 16, “Leases” (Continued)

Date of adoption by Group

Mandatory for financial years commencing on or after 1st January 2019. At this stage, the
Group does not intend to adopt the standard before its effective date. The Group intends to
apply the simplified transition approach and will not restate comparative amounts for the year
prior to first adoption.

There are no other HKFRSs or HK(IFRIC) interpretations that are not yet effective and that
would be expected to have a material impact on the entity in the current or future reporting
periods and on foreseeable future transactions.

2.2 Consolidation

(a) Subsidiaries

Subsidiaries are entities (including structured entities) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power
over the entity. Subsidiaries are consolidated from the date on which control is transferred to
the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The
consideration transferred for the acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred to the former owners of the acquiree and the equity
interests issued by the Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Acquisition related
costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date.

ALCO HOLDINGS LIMITED ANNUAL REPORT 2018 63