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NOTESTOTHEFINANCIALSTATEMENTS
31 DECEMBER 2013
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.4 Summary of significant accounting policies
(a) Subsidiaries and basis of consolidation
(i) Subsidiaries
A subsidiary is an entity over which the Group has power to govern the financial and operating policies so as to
obtain benefits from its activities.
In the Bank’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment
losses. On the disposal of such investments, the difference between net disposal proceeds and their carrying
amounts is included in the statements of income.
(ii) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries as at
the reporting date. The financial statements used in the preparation of the consolidated financial statements are
prepared for the same reporting date as the Bank. Consistent accounting policies are applied to like transactions
and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group
transactions are eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date.
Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised
in other comprehensive income. The cost of a business combination is measured as the aggregate of the fair
values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments
issued, plus any costs directly attributable to the business combination.
Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired
subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the statement of
financial position. Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable
assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in
statements of income on the date of acquisition.
When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree
are reassessed on acquisition unless the business combination results in a change in the terms of the contract
that significantly modifies the cash flows that would otherwise be required under the contract.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control,
and continue to be consolidated until the date such control ceases.
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EXIM Bank Annual Report 2013