Page 94 - ar2012

ParkwayLife REIT Annual Report FY2012
92
Notes to the Financial Statements
2 Basis of preparation (cont’d)
2.4 Use of estimates and judgments
The preparation of fnancial statements in conformity with RAP 7 requires the Manager to make judgments, estimates
and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
In particular, information about assumptions and estimation uncertainties that have a signifcant risk of resulting in a
material adjustment within the next fnancial year are included in the following notes:
- Note 4 – fair value determination of investment properties; and
- Note 23 – valuation of fnancial instruments.
3 Signifcant accounting policies
The accounting policies set out below have been applied consistently by the Group to all periods in these fnancial
statements.
3.1 Basis of consolidation
Business combinations
Business combinations are accounted for using the acquisition method in accordance with FRS 103 Business
Combination as at the acquisition date, which is the date on which control is transferred to the Group. Control is the
power to govern the fnancial and operating policies of an entity so as to obtain benefts from its activities. In assessing
control, the Group takes into consideration potential voting rights that are currently exercisable.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such
amounts are generally recognised in proft 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
classifed 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 proft or loss.
Subsidiaries
Subsidiaries are entities controlled by the Group. The fnancial statements of subsidiaries are included in the consolidated
fnancial 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.