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notes tothe
financial statements
104
STARHILL global reit ANNUAL REPORT FY 2016/17
Significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most
significant effect on the amount recognised in the financial statements are described in the following notes:
·
Note 4 – Valuation of investment properties
·
Note 6 – Impairment on interests in subsidiaries
·
Notes 7 and 24 – Valuation of financial instruments
2.5 Adoption of new/revised FRS
RAP 7
Reporting Framework for Unit Trusts
(“revised RAP 7”) (Revised June 2016) takes into account the changes made to
FRS 32
“Financial Instruments: Presentation”
and FRS 107
“Financial Instruments: Disclosures”
in relation to the offsetting of
financial assets and liabilities, and new standards issued after 2012 – namely FRS 110
“Consolidated Financial Statements”
,
FRS 112
“Disclosure of Interests in Other Entities”
and FRS 113
“Fair Value Measurement”
. The adoption of this revised RAP 7
did not result in substantial changes to the accounting policies of the Group and the Trust, and had no financial effect on
the amounts reported for the current or previous financial period.
3.
Significant accounting policies
The accounting policies set out below have been applied consistently by the Group and the Trust to all periods in these
financial statements and have been applied consistently by Group entities, except as explained in Note 2.5.
3.1 Basis of consolidation
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. Control exists when the Group is exposed to or has rights to variable returns from
its involvement with an entity and has the ability to affect those returns through its power over the entity.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such
amounts are generally recognised in the statement of total return.
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
that meets the definition of a financial instrument is classified as equity, it is not remeasured and settlement is accounted
for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in the
statement of total return.
Subsidiaries
Subsidiaries are entities controlled by the Group and include entities that are created to accomplish a narrow and well
defined objective such as the execution of a specific transaction where the substance of the relationship is that the
Group controls the entity. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control commences
until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align
them with the policies adopted by the Group.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Accounting for subsidiaries by the Trust
Interests in subsidiaries are stated in the Trust’s balance sheet at cost less accumulated impairment losses.