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EC World Real Estate Investment Trust ANNUAL REPORT 2016
NOTES TO THE
Financial Statements
For the Financial Year ended 31 December 2016
2.
Significant accounting policies (continued)
2.4 Income taxes (continued)
Return of capital and repayment of loan principal are generally regarded as capital in nature and are not taxable
in the hands of the Trustee.
Gains arising from the disposal of shares in the Singapore Holding Companies is not subject to Singapore tax
unless the gains are considered to be trading gains or gains of an income nature.
2.5 Group accounting
(a) Subsidiaries
(i)
Consolidation
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 on that control ceases.
In preparing the consolidated financial statements, transactions, balances and unrealised gains on
transactions between group entities are eliminated. Unrealised losses are also eliminated unless the
transactions provide evidence of an impairment indicator of the transferred asset. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
(ii)
Acquisitions
The acquisition method of accounting is used to account for business combinations entered into by
the Group.
The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets
transferred, the liabilities incurred and the equity interests issued by the Group. The consideration
transferred also includes any contingent consideration arrangement and any pre-existing equity
interest in the subsidiary measured at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their fair values at the acquisition date.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the
acquiree at the date of acquisition either at fair value or at the non-controlling interest’s proportionate
share of the acquiree’s net identifiable assets.
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 net identifiable assets acquired is recorded as goodwill.