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Impairment tests for intangible assets (including
goodwill) and property, plant and equipment
The recoverable amount of the cash generating units is
defined as the higher of their value in use or their fair
value less costs to sell. These calculations require the use
of estimates and assumptions with regard, among other
things, to discount rates, exchange rates, future invest-
ments and expected operating efficiency. We refer to
Note 10 for the relevant assumptions.
Provisions
The estimates and judgments that most impact the
amount of the provisions are the estimated costs and the
expected likelihood and timing of the cash outflows. They
are based on the most recent available information at the
balance sheet date. We refer to Note 22 for the relevant
assumptions.
Other assumptions and estimates will be discussed in the
respective notes where they are used.
BASIS OF CONSOLIDATION
Business combinations
Business combinations are accounted for using the
acquisition method when control is transferred to the
Group (see Basis of consolidation - Subsidiaries). The
consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for
impairment (see Intangible assets – Goodwill). Any gain
on a bargain purchase is recognised in profit or loss
immediately. Transaction costs are expensed as incurred.
The consideration transferred does not include amounts
related to the settlement of pre-existing relationships.
Such amounts are generally recognised in the income
statement.
Any contingent consideration is measured at fair value at
the date of acquisition. If an obligationto pay a contingent
consideration that meets the definition of a financial
instrument is classifiedas equity, then it is not remeas-
ured and settlement is accounted for within equity.
Otherwise, subsequent changes in the fair value of the
contingent consideration are recognised in the income
statement.
If share-based payment awards (replacement awards) are
required to be exchanged for awards held by the
acquiree’s employees (acquiree’s awards), then all or a
portion of the amount of the acquirer’s replacement
awards is included in measuring the consideration
transferred in the business combination. This determina-
tion is based on the market-based measure of the
replacement awards compared with the market-based
measure of the acquiree’s awards and the extent to which
the replacement awards relate to pre-combination
service.
Subsidiaries
Subsidiaries are those entities over which the Company
exercises control. By control is understood that the
Company is exposed to or has right to variable returns
from its involvement in the investee, and has the ability to
affect these returns through its power over the investee.
The financial statements of subsidiaries are recognized in
the consolidated financial statements from the date that
control commences until the date that control ceases.
Losses realized by subsidiaries with non-controlling
interests are proportionally allocated to the non-con-
trolling interests in these subsidiaries, even if this means
that the non-controlling interests display a negative
balance.
If the Group no longer has control over a subsidiary all
assets and liabilities of the subsidiary, any non-controlling
interests and other equity components with regard to the
subsidiary are derecognized and the ensuing gains or
losses are recognized in the income statement. Each
result with regard to the loss of control will be included in
the income statement. Any remaining interest in the
former subsidiary will be recognized at fair value on the
date of loss of control, after which it will be recognized as
an associated company or as a financial asset available
for sale, depending on the level of control retained.
Equity accounted investees
Equity accounted investees are entities over which the
Group exercises significant influence, but not control or
joint control, over the financial and operational policies.
Significant influence is deemed to exist where the Group
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05 / FINANCIAL REPORT
KINEPOLIS GROUP
ANNUAL REPORT 2014