Page 105 - EXIM-BANK-AR20

Section 06 Financial Statements
103

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 statement of profit and loss.
(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.
Control is achieved when the Group 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. Specifically, the Group
controls an investee if, and only if, the Group has:

• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
• Exposure, or rights, to variable returns from its involvement with the investee; and
• The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption
and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement(s) with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
• The Group’s voting rights and potential voting rights.
The Group and the Bank re-assess whether or not it controls an investee if facts and circumstances indicate
that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains control until the date the Group ceases to
control the subsidiary.

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.