53
Notes to Financial Statements
December 31, 2014
2. Summary of Significant Accounting Policies (cont’d)
BASIS OF CONSOLIDATION (cont’d)
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and 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 that
subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary
(i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable
FRSs). 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, when applicable, the cost on initial
recognition of an investment in an associate.
In the Co-operative’s financial statements, investments in subsidiaries and associates are carried at cost less any
impairment in net recoverable value that has been recognised in the profit or loss.
INTERESTS IN NTUC FAIRPRICE FOUNDATION LTD
The member of the NTUC Fairprice Foundation Ltd is Alphaplus Investment Pte Ltd, a wholly-owned subsidiary of
the Co-operative. The net result and net assets of NTUC Fairprice Foundation Ltd (“Foundation”) have not been
consolidated as the Memorandum of Association of the Foundation provides that it cannot pay, or transfer directly or
indirectly from its income and property to the member in the form of dividend, bonus, or by way of profit, except for
paymentsmade in good faith for the return of goods and services. Furthermore, theMemorandumprovides that in the
event of winding up of the Foundation, the remains after the satisfaction of all its debts and liabilities shall not be paid to
or distributed to themember of theFoundation. Approval fromtheCommissioner ofCharities is required if themember
were to amend the clauses in the Memorandum of Association. Consequently, the Group does not have control over
the assets and reserve of the Foundation and hence the Foundation is not accounted for as a subsidiary of the Group.
BUSINESS COMBINATIONS
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for
each acquisition is measured at the aggregate of the acquisition date fair values of assets given, liabilities incurred by
the Group to the former owners of the acquiree, and equity interests issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent
consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values
are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below).
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify
as measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classifiedas equity is not remeasuredat subsequent reportingdates and its subsequent settlement
is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at
subsequent reporting dates in accordance with FRS 39
Financial Instruments: Recognition and Measurement,
or
FRS 37
Provisions, Contingent Liabilities and Contingent Assets
, as appropriate, with the corresponding gain or loss
being recognised in profit or loss.
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are
remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or
loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date
that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such
treatment would be appropriate if that interest were disposed of.
