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Notes to the consolidated
financial statements
continued
for the year ended 30 June 2017
100
Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
1.
Accounting policies and presentation of consolidated financial statements
continued
1.5
Goodwill
Goodwill is carried at cost as established at the date of acquisition less accumulated impairment losses. An impairment loss recognised for goodwill
is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on
disposal.
For the purposes of impairment testing, goodwill is allocated to each of the group’s cash-generating units that are expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that
the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first
to the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each
asset in the unit.
1.6
Investments in subsidiaries
Subsidiaries are entities over which the group has control.
When the company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient
to give it the practical ability to direct the relevant activities of the investee unilaterally.
The company considers all relevant facts and circumstances in assessing whether or not the company’s voting rights in an investee are sufficient to
give it power, including:
■■
The size of the company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders
■■
Potential voting rights held by the company, other vote holders or other parties
■■
Rights arising from other contractual arrangements
■■
Any additional facts and circumstances that indicate that the company has, or does not have, the current ability to direct the relevant activities
at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.
1.7
Interests in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for
the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement which exists when decisions
about the relevant activities require unanimous consent of the parties sharing control.
When a group entity transacts with its joint operation, profits and losses resulting from the transactions with the joint operation are recognised in the
consolidated financial statements only to the extent of interests in the joint operation that are not related to the group.
When a group entity undertakes its activities under joint operations, the group as a joint operator recognises in relation to its interest in a joint
operation:
■■
Its assets, including its share of any assets held jointly
■■
Its liabilities, including its share of any liabilities incurred jointly
■■
Its revenue from the sale of its share of the output arising from the joint operation
■■
Its expenses, including its share of any expenses incurred jointly.
The group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRS applicable
to the particular assets, liabilities, revenues and expenses.
1.8
Investments in associates and joint ventures
An associate is an entity over which the company can exercise significant influence, through participation in the financial and operating policy
decisions of the investee, but where it does not have control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have benefits derived from the net assets of
the joint arrangement.
The profits and losses, assets and liabilities of associates and joint ventures are incorporated in these consolidated financial statements using the
equity method of accounting, except when the investment is classified as held-for-sale, in which case it is accounted for in accordance with IFRS 5.
Under the equity method, the investment is initially recorded at cost and thereafter the carrying value is adjusted to recognise the investor’s share of
the post-acquisition profits or losses of the investee after the date of acquisition, distributions received and any adjustments that are required. The
profits or losses are recognised in the statement of profit or loss and other comprehensive income. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment.
An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate
or a joint venture.
If the terms of interest that the company has in the joint venture provide that the investee is contractually obliged to distribute 100% of its net
distributable earnings, the investment is accounted for as a financial instrument and is not equity accounted. Refer to
note 1.12 – Financial instruments
.