UNBOUNCE - EXAMPLE PAGE-REPORT-ENTERPRISE DOCUMENT-KINGSPAN - Flipbook - Page 135
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021 (continued)
1
Statement of Accounting Policies (continued)
Supply and install projects
If a contract requires the Group to install
or commission a product and the product
can be separated or sold separately from
the installation service and the contract
specifically separates the performance
obligations then the product only supply
element is recognised in line with the
criteria set out in the supply only policy.
The installation element is recognised
over time in line with the milestones set
out in the contract. If there is significant
integration provided for in the contract
then a single purchase order is identified
and the revenue is recognised over time.
Service and maintenance
Where the Group provides a post-sale
Service and Maintenance offering the
revenue associated with this separately
identifiable performance obligation is
initially recognised in deferred income. The
revenue is recognised in the P&L as each
site visit occurs.
Research and Development
Expenditure on research and development
is recognised as an expense in the period in
which it is incurred. An asset is recognised
only when all the conditions set out in IAS 38
Intangible Assets are met.
Business Combinations
Business combinations are accounted for
using the acquisition method as at the
date of acquisition.
In accordance with IFRS 3 Business
Combinations, the fair value of
consideration paid for a business
combination is measured as the aggregate
of the fair values at the date of exchange
of assets given and liabilities incurred or
assumed in exchange for control. The
assets, liabilities and contingent liabilities
of the acquired entity are measured at
fair value as at the acquisition date.
When the initial accounting for a business
combination is determined, it is done so on
a provisional basis with any adjustments
to these provisional values made within
12 months of the acquisition date and are
effective as at the acquisition date.
To the extent that deferred consideration
is payable as part of the acquisition cost
and is payable after one year from the
acquisition date, the deferred consideration
is discounted at an appropriate interest rate
and, accordingly, carried at net present
value (amortised cost) in the Consolidated
Statement of Financial Position. The
discount component is then unwound as an
interest charge in the Consolidated Income
Statement over the life of the obligation.
The Group measures goodwill at the
acquisition date as:
Where a business combination agreement
provides for an adjustment to the cost
of a business acquired contingent on
future events, other than put options held
by non-controlling interests, the Group
accrues the fair value of the additional
consideration payable as a liability at
acquisition date. This amount is reassessed
at each subsequent reporting date
with any adjustments recognised in the
Consolidated Income Statement.
g the fair value of the consideration
transferred; plus
g the recognised amount of any noncontrolling interests in the acquiree;
plus
g if the business combination is achieved
in stages, the fair value of the preexisting equity interest in the acquiree;
less
g the net recognised amount (generally
fair value) of the identifiable assets
acquired and liabilities assumed.
If the business combination is achieved
in stages, the fair value of the acquirer’s
previously held equity interest in
the acquiree is re-measured at the
acquisition date through the Consolidated
Income Statement.
For each business combination, the Group
elects whether to measure the noncontrolling interests in the acquiree at fair
value or at the proportionate share of the
acquiree’s identifiable net assets.
Transaction costs are expensed to
the Consolidated Income Statement
as incurred.
Put options held by
non-controlling interest shares
Any contingent consideration is
measured at fair value at the date of
acquisition. Where a put option is held
by a non-controlling interest (“NCI”) in
a subsidiary undertaking, whereby that
party can require the Group to acquire
the NCI’s shareholding in the subsidiary
at a future date, but the NCI retains
present access to the results of the
subsidiary, the Group applies the present
access method of accounting to this
arrangement. The Group recognises a
contingent consideration liability at fair
value, being the Group’s estimate of the
amount required to settle that liability
and a corresponding reserve in equity. Any
subsequent remeasurements required due
to changes in fair value of the put liability
estimation are recognised in the Put
Option Liability Reserve in equity.
Goodwill
Goodwill arises on business combinations
and represents the difference between
the fair value of the consideration and
the fair value of the Group’s share of the
identifiable net assets of a subsidiary at
the date of acquisition.
Kingspan Group plc Annual Report & Financial Statements 2021
Following initial recognition, goodwill is
measured at cost less any accumulated
impairment losses.
As at the acquisition date, any goodwill
acquired is allocated to each of the cash
generating units expected to benefit from
the combination’s synergies. The cash
generating units represent the lowest
level within the Group which generate
largely independent cash inflows and
these units are not larger than the
operating segments (before aggregation)
determined in accordance with IFRS 8
Operating Segments.
Goodwill is tested for impairment at the
same level as the goodwill is monitored
by management for internal reporting
purposes, which is at the individual cash
generating unit level.
Goodwill is subject to impairment
testing on an annual basis and at any
time during the year if an indicator
of impairment is considered to exist.
The goodwill impairment tests are
undertaken at a consistent time each year.
Impairment is determined by assessing
the recoverable amount of the cash
generating unit to which the goodwill
relates. Where the recoverable amount of
the cash generating unit is less than the
carrying amount, an impairment loss is
recognised in the Consolidated Income
Statement. Impairment losses arising
in respect of goodwill are not reversed
following recognition.
On disposal of a subsidiary, the
attributable amount of goodwill, not
previously written off, is included in the
calculation of the profit or loss on disposal.
Financial Statements
