NOTES TO
FINANCIAL STATEMENTS
December 31, 2015
65
CITIC ENVIROTECH LTD.
Annual
Report
2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
2.11 Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is
acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the fair value of the
acquirer’s previously held equity interest (if any) in the entity over net of the acquisition-date amounts
of the identifiable assets acquired and the liabilities assumed.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets
exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the
excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of
impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected
to benefit from the synergies of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit
and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in
the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary or the relevant cash-generating unit, the attributable amount of goodwill
is included in the determination of the profit or loss on disposal.
2.12 Service concession receivables
Consideration given by the grantor
A financial asset (receivable under service concession arrangement) is recognised to the extent
that the Group has an unconditional right to receive cash or another financial asset from or at the
direction of the grantor for the construction services rendered and/or the consideration paid and
payable by the Group for the right to manage and operate the infrastructure for public service. The
Group has an unconditional right to receive cash if the grantor contractually guarantees to pay the
Group (a) specified or determinable amounts or (b) the shortfall, if any, between amounts received
from users of the public service and specified or determinable amounts, even if the payment is
contingent on the Group ensuring that the infrastructure meets specified quality or efficiency
requirements. The financial asset (receivable under service concession arrangement) is accounted for
in accordance with the policy set out for “Financial instruments” above.
An intangible asset (operating concession) is recognised to the extent that the Group receives a right
to charge users of the public service. The intangible asset (operating concession) is accounted for in
accordance with the policy set out for “Intangible assets” below.
If the Group is paid for the construction services partly by a financial asset and partly by an intangible
asset, then each component of the consideration is accounted for separately and is recognised
initially at the fair value of the consideration.
