35
2017 WEL Networks
|
Annual Report
wel.co.nz
Critical accounting estimates
The preparation of financial statements in conformity with
NZ IFRS 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 2.
(b)
Principles of consolidation
(i)
Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls
an entity when the Group 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. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for
business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the
assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by
the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a
business combination are-measured initially at their fair
values at the acquisition date. The Group recognises any
non-controlling interest in the acquiree on an acquisition-
by-acquisition basis, either at fair value or at the non-
controlling interest’s proportionate share of the recognised
amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer’s previously
held equity interest in the acquiree is re-measured to fair
value at the acquisition date; any gains or losses arising
from such re-measurement are recognised in the profit and
loss component of the statement of comprehensive income.
The excess of the consideration transferred, the
amount of any non-controlling interest in the acquiree
and the acquisition date fair value of any previous
equity interest in the acquiree over the fair value of the
identifiable net assets acquired is recorded as goodwill.
If the total of consideration transferred, non-controlling
interest recognised and previously held interest
measured is less than the fair value of the net assets
of the subsidiary acquired in the case of a bargain
purchase, the difference is recognised directly in the
statement of comprehensive income.
Inter-company transactions, balances and unrealised gains
on transactions between group companies are eliminated.
Unrealised losses are also eliminated. When necessary,
amounts reported by subsidiaries have been adjusted to
conform with the Group’s accounting policies.
(ii)
Changes in ownership interests in subsidiaries
without change of control
Transactions with non-controlling interests that do not
result in loss of control are accounted for as equity
transactions – that is, as transactions with the owners in
their capacity as owners. The difference between fair value
of any consideration paid and the relevant share acquired
of the carrying value of net assets of the subsidiary is
recorded in equity. Gains or losses on disposals to non-
controlling interests are also recorded in equity.
(c)
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represents amounts receivable
for goods supplied, stated net of discounts, returns and
GST. The Group recognises revenue when the amount of
revenue can be reliably measured; when it is probable that
future economic benefits will flow to the entity; and when
specific criteria have been met for each of the Group’s
activities, as described on the following page.
WEL NETWORKS LIMITED
Notes to the financial statements
For the year-ended 31 March 2017
(continued)
