89 / 186
FINANCIAL STATEMENTS
6
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3
CONSOLIDATION, BUSINESS COMBINATIONS AND GOODWILL
Basis of consolidation
FULLY-CONSOLIDATED SUBSIDIARIES
Companies over which the Group exercises control are consolidated. IFRS 10 has introduced a single model of control based on three
criteria: “an investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee”.
Assets, liabilities, income and expenses of consolidated subsidiaries are included in the consolidated financial statements from the date
on which control is transferred to the Group until the date the Group ceases to control the subsidiary. All inter-company transactions
and balances are eliminated on consolidation. Non-controlling interests are presented separately in the financial statements.
JOINT VENTURES AND JOINT OPERATIONS
IFRS 11 classifies joint arrangements into two types – joint ventures and joint operations. The Group determines the type of joint
arrangement in which it is involved by considering its rights and obligations in the arrangement, assessed based on the structure and
legal form of the arrangement, the contractual terms agreed to by the parties to the arrangement and, when relevant, other facts and
circumstances.
A joint venture is a joint arrangement whereby the parties with joint control (“joint venturers”) have rights to the net assets of the
arrangement. A joint operation is a joint arrangement whereby the parties with joint control (“joint operators”) have rights to the assets
and obligations for the liabilities of the arrangement.
Joint arrangements that qualify as joint ventures are accounted for using the equity method (equity-accounted investees).
For joint operations, each of the joint operators must recognise the assets and the liabilities (and income and expenses) relating to its
interest in the joint operation.
Translation of foreign companies’ financial statements and foreign-currency denominated transactions
FUNCTIONAL CURRENCY 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 (
i.e.
in which the entity mainly generates and expends cash), which corresponds to its functional
currency.
The consolidated financial statements are presented in euros, which is the Group’s presentation currency.
TRANSACTIONS AND BALANCES
Foreign-currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when
included in other comprehensive income as the effective portion of qualifying cash flow hedges and qualifying net investment hedges.
TRANSLATION OF FINANCIAL STATEMENTS OF SUBSIDIARIES
The financial statements of foreign subsidiaries whose functional currency is not the euro are translated into euros as follows:
●
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
●
income and expenses are translated at average exchange rates for the period.
All resulting exchange differences are recognised in other comprehensive income in a separate line.
Goodwill arising on the acquisition of a foreign entity is recognised in the entity’s functional currency and translated into euros at the
closing rate.
ASSYSTEM
REGISTRATION DOCUMENT
2016
89