56
GDS Global Limited Annual Report 2015
NOTES TO
FINANCIAL STATEMENTS
As at 30 September 2015
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
In the Company’s separate financial statements, investments in subsidiaries are carried at cost less
any impairment in net recoverable value that has been recognised in profit or loss.
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
classified as equity is not remeasured at subsequent reporting dates 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 at fair value, with changes in fair value 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 interests were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under the FRS are recognised at their fair value at the acquisition date, except that:
Deferred tax assets or liabilities and liabilities or assets related to employee benefit
arrangements are recognised and measured in accordance with FRS 12 Income Taxes and
FRS 19 Employee Benefits respectively;
Liabilities or equity instruments related to share-based payment transactions of the acquiree
or the replacement of an acquiree’s share-based payment awards transactions with share-
based payment awards transactions of the acquirer in accordance with the method in FRS
102 Share-based Payment at the acquisition date; and
Assets (or disposal groups) that are classified as held for sale in accordance with FRS 105
Non-current Assets Held for Sale and Discontinued Operations are measured in accordance
with that Standard.
Non-controlling interests that are present ownership interests and entitle their holders to a
proportionate share of the entity’s net assets in the event of liquidation may be initially measured
either at fair value or at the non-controlling interests’ proportionate share of the recognised
amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a
transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value
or, when applicable, on the basis specified in another FRS.
If the initial accounting for a business combination is incomplete by the end of the reporting period
in which the combination occurs, the Group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted during the measurement period
(see below), or additional assets or liabilities are recognised, to reflect new information obtained
about facts and circumstances that existed as of the acquisition date that, if known, would have
affected the amounts recognised as of that date.
