KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
F-86
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 period 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 period (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 period 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.
Where a business combination is achieved in stages, the Group’s previously-held interests in the
acquired entity are re-measured to fair value at the acquisition date (i.e. the date the Group attains
control) and the resulting gain or loss, if any, is recognised in the consolidated statement of income.
Amounts arising from interests in the acquiree prior to the acquisition date that have previously been
recognised in equity are reclassified to the consolidated statement of income, where such treatment
would be appropriate if that interest is disposed of.
In accordance with normal oil exploration and production industry practice, identifiable assets and
liabilities are ascribed fair values, and the balance of the fair value of the consideration given is typically
allocated as the fair value attributable to the oil and gas properties and related hydrocarbon reserves and
therefore, goodwill does not normally arise on acquisitions.
Interests in joint ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an
economic activity that is subject to joint control, that is when the strategic financial and operating policy
decisions relating to the activities of the joint venture require the unanimous consent of the parties
sharing control.
Where a Group entity undertakes its activities under joint venture arrangements directly, the Group’s
share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognised
in the financial statements of the relevant entity and classified according to their nature. Liabilities and
expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an
accrual basis. Income from the sale or use of the Group’s share of the output of jointly controlled assets,
and its share of joint venture expenses, are recognised when it is probable that the economic benefits
associated with the transactions will flow to/from the Group and their amount can be measured reliably.
Joint venture arrangements that involve the establishment of a separate entity in which each venturer
has an interest are referred to as jointly controlled entities. The Group reports its interests in jointly
controlled entities using proportionate consolidation
.
The Group’s share of the assets, liabilities, income
and expenses of jointly controlled entities are combined with the equivalent items in the consolidated
financial statements on a line-by-line basis.
Where the Group transacts with its jointly controlled entities, unrealised profits and losses are
eliminated to the extent of the Group’s interest in the joint venture.
