Page 41 - Nanyang Technological University

ON A RAPID RISE

NOTES TO
FINANCIAL STATEMENTS (CONT’D)

31 March 2015

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

2.2 Consolidation (cont’d)

The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised in the profit or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities,
that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent
consideration is classified as funds and reserves, it is not remeasured and settlement is accounted for
within funds and reserves. Otherwise, subsequent changes to the fair value of the contingent consideration
are recognised in the statement of comprehensive income.

Joint ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control.

The results and assets and liabilities of joint ventures are incorporated in these consolidated financial
statements using the equity method of accounting. Under the equity method, an investment in joint
venture is initially recognised in the consolidated statement of financial position at cost and adjusted
thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the
joint venture. When the Group’s share of losses of a joint venture exceeds the Group’s interest in that joint
venture, the Group discontinues recognising its share of further losses. Additional losses are recognised
only to the extent that the Group has incurred legal or constructive obligations or made payments on
behalf of the joint venture.

An investment in a joint venture is accounted for using the equity method from the date on which the
investee becomes a joint venture. On acquisition of the investment in a joint venture, any excess of the
cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of
the investee is recognised as goodwill, which is included within the carrying amount of the investment.
Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost
of investment, after reassessment, is recognised immediately in profit or loss in the period in which the
investment is acquired.

When a Group entity transacts with a joint venture of the Group, profits and losses resulting from the
transactions with the joint venture are recognised in the Group’s consolidated financial statements only to
the extent of interests in the joint venture that are not related to the Group.

NANYANG TECHNOLOGICAL UNIVERSITY AND ITS SUBSIDIARIES 39