Notes to the consolidated financial statements
30 June 2014
2 Summary of significant accounting policies (continued)
(iv) Critical accounting estimates
(b) Principles of consolidation
(ii) Associates
(iii) Changes in ownership interests
Associates are all entities over which the Group has significant influence but not control or joint control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using
the equity method of accounting, after initially being recognised at cost. The Group’s investment in associates includes
goodwill identified on acquisition (refer to note 30).
The Group’s share of its associates’ post acquisition profits or losses is recognised in profit or loss, and its share of
post acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post acquisition
movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised
as reduction in the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
long term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on
behalf of the associate.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity
owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling
and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the
adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity
attributable to owners of Bradken Limited.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement,
statement of comprehensive income, statement of changes in equity and balance sheet respectively.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 2(h)).
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in
note 4.
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2014.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if
the Group has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
The Group re-assesses 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. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of
comprehensive income from the date the Group gains control until the date the Group ceases to control the
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in
the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
Page 37
Bradken Limited
1...,64,65,66,67,68,69,70,71,72,73 75,76,77,78,79,80,81,82,83,84,...136