IMC ANNUALREPORT 2020 - Flipbook - Page 42
IMC ANNUAL REPORT 2021
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
investment in these entities. Unrealized losses are also eliminated unless
the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of equity accounted investees have
been changed where necessary to ensure consistency with the policies
adopted by the Group.
(d) Changes in ownership interests
A change in percentage of ownership interest results in an adjustment
between the carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the Group entity. Any
difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognized in retained
earnings within equity attributable to the owners of the Company.
2.4. FOREIGN CURRENCIES
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”).
The consolidated financial statements are presented in euro, which is
the presentation and functional currency of the Company. All values
are rounded to the nearest million, unless otherwise indicated.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions.
Consolidated
financial statements
Notes to the consolidated
financial statements
Company
financial statements
Other information
Independent Auditor’s report
Foreign exchange gains and losses that relate to borrowings and cash
and cash equivalents are presented in the statement of profit or loss,
within the line-items finance income or costs. All other foreign exchange
gains and losses are presented in the statement of profit or loss on a
net basis within other income or other expenses.
Non-monetary assets and liabilities denominated in foreign currencies
that are measured at fair value are translated into the functional
currency using the exchange rates at the date that the fair value was
determined. Non-monetary items in a foreign currency that are
measured based on historical cost are translated using the exchange
rate at the date of the transaction.
2.5. BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for all business
combinations, regardless of whether equity instruments or other assets
are acquired. The consideration transferred for the acquisition of a
subsidiary comprises the:
• fair values of the assets transferred
• liabilities incurred to the former owners of the acquired business
• equity interests issued by the Group
• fair value of any asset or liability resulting from a contingent
consideration arrangement, and
• fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their
respective fair value at the acquisition date.
The Group recognizes any non-controlling interest in the acquired entity
on an acquisition-by-acquisition basis either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s
net identifiable assets.
Acquisition-related costs are expensed as incurred. The carrying amount
of equity-accounted investments is tested for impairment on a periodic
basis and whenever events or changes in circumstances indicate that
the carrying amount may not be fully recoverable.
Any excess consideration paid, being the difference between the fair
value of the net identifiable assets and the actual consideration paid, is
recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the business acquired, the difference is
recognized directly in profit or loss as a so-called bargain purchase.
Where settlement of any part of cash consideration is deferred, the
amounts payable in the future are discounted to their present value as
at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing
could be obtained from an independent lender under comparable terms
and conditions. Any contingent consideration, if applicable, is classified
either as equity or financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair
value recognized in profit or loss.
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