Page 40 - Nanyang Technological University

NOTES TO
FINANCIAL STATEMENTS (CONT’D)

31 March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.2 Consolidation

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the University Company
and entities controlled by the University Company and its subsidiaries. Control is achieved when the
University Company:

(i) Has power over the investee;
(ii) Is exposed, or has rights, to variable returns from its involvement with the investee; and
(iii) Has the ability to use its power to affect its returns.

The University Company reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the University Company obtains control over the subsidiary and
ceases when the University Company loses control of the subsidiary. Specifically, income and expenses
of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit
or loss and other comprehensive income from the date the University Company gains control until the
date when the University Company ceases to control the subsidiary.

The accounting policies of subsidiaries have been changed where necessary to align them with the
policies adopted by the Group.

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group
transactions, are eliminated in preparing the consolidated 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

Business combinations are accounted for using the acquisition method as at the acquisition date, which is
the date on which control is transferred to the Group. 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.

38 NTU ANNUAL REPORT 2015