Page 66 -

Notes to the Consolidated Financial Statements

31st March 2018

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 Consolidation (Continued)

(a) Subsidiaries (Continued)

The Group recognises any non-controlling interest in the acquiree on an acquisition-by-
acquisition basis. Non-controlling interests in the acquiree that are present ownership
interests and entitle their holders to a proportionate share of the entity’s net assets in the
event of liquidation are measured at either fair value or the present ownership interests’
proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All
other components of non-controlling interests are measured at their acquisition date fair
value, unless another measurement basis is required by HKFRS.

If the business combination is achieved in stages, the acquisition date carrying value of the
acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the
acquisition date; any gains or losses arising from such re-measurement are recognised in
profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with HKAS 39 in profit or loss.
Contingent consideration that is classified as equity is not remeasured, and its subsequent
settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree
over the fair value of the identifiable net asset acquired is recorded as goodwill. If the total
of consideration transferred, non-controlling interest recognised and previously held interest
measured is less than the fair value of the net assets of the subsidiary acquired in the case
of a bargain purchase, the difference is recognised directly in the consolidated income
statement.

Inter-group transactions, balances and unrealised gains on transactions between group
companies are eliminated. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred asset. When necessary, amounts
reported by subsidiaries have been adjusted to conform with the Group’s accounting
policies.

64 ALCO HOLDINGS LIMITED ANNUAL REPORT 2018