NOTES TO
FINANCIAL STATEMENTS
December 31, 2015
58
CITIC ENVIROTECH LTD.
Annual Report
2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.3 Basis of consolidation (cont’d)
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have,
the current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases
when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary
acquired or disposed of during the period are included in the consolidated statement of profit or
loss and other comprehensive income from the date the Group gains control until the date when the
Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of
the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is
attributed to the owners of the Company and to the non-controlling interests even if this results in
the non-controlling interests having a deficit balance.
The results of subsidiaries acquired or disposed of during the period are included in the consolidated
statement of profit or loss and other comprehensive income from the effective date of acquisition or
up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein.
2.3.1 Changes in the Group’s ownership interest in existing subsidiaries
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted
for as equity transactions. The carrying amounts of the Group’s interests and the 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 interests are adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed to owners of the
Company.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the
difference between (i) the aggregate of the fair value of the consideration received and the fair value
of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in
other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit
or loss or transferred directly to retained earnings as specified/ permitted by applicable FRSs) in the
same manner as would be required if the relevant assets or liabilities were disposed of. The fair value
of any investment retained in the former subsidiary at the date when control is lost is regarded as
the fair value on initial recognition for subsequent accounting under FRS 39
Financial Instruments:
Recognition and Measurement
or, when applicable, the cost on initial recognition of an investment in
an associate or a joint venture.
In the Company’s financial statements, investments in subsidiaries, interest in associates and interest
in joint ventures are carried at cost less any impairment in net recoverable value that has been
recognised in profit or loss.
