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KUWAIT ENERGY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2017
19
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Business combinations (continued)
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under
IFRS 3 (revised 2008) are recognised at their fair value at the acquisition date, except for non-current assets (or disposal
groups) that are classified as held for sale in accordance with “IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations”, which are measured at fair value less costs to sell.
If the initial accounting for a business combination is incomplete by the end of the reporting year in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement year (see below), or additional assets or liabilities are
recognised, to reflect new information obtained about facts and circumstances that existed as at the acquisition date
that, if known, would have affected the amounts recognised as at that date.
The measurement period is the year from the date of acquisition to the date the Group receives complete information
about facts and circumstances that existed as at the acquisition date and is subject to a maximum of one year.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the
fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Interest in joint arrangements
A joint arrangement is one in which two or more parties have joint control. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require the
unanimous consent of the parties sharing control.
Most of the Group’s activities are conducted through joint operations, whereby the parties that have joint control of
the arrangement have the rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group
reports its interests in joint operations using proportionate consolidation – the Group’s share of the assets, liabilities,
income and expenses of the joint operation are combined with the equivalent items in the consolidated financial
statements on a line-by-line basis.
A joint venture, which normally involves the establishment of a separate legal entity, is a contractual arrangement
whereby the parties that have joint control of the arrangement have the rights to the arrangement’s net assets. The
results, assets and liabilities of a joint venture are incorporated in the consolidated financial statements using the
equity method of accounting.
Under the equity method of accounting, an investment in joint venture is initially recognised in the consolidated
balance sheet at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other
comprehensive income of the joint venture. When the Group’s share of losses of joint venture exceeds the Group’s
interest in that joint venture (which includes any long-term interests that, in substance, form part of the Group’s net
investment in the joint venture), the Group discontinues recognising its share of further losses. Additional losses are
recognised only to the extent that the Group has incurred legal or constructive obligation or made payments on behalf
of the joint venture.
Where the Group transacts with its joint operations, unrealised profits and losses are eliminated to the extent of the
Group’s interest in the joint operation.