RCS GROUP CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 31 December 2015
1.3 Basis of Consolidation (continued)
Loss of control
On the loss of control, the RCS Group derecognises the
assets and liabilities of the subsidiary, any non controlling
interest and the other components of equity related to the
subsidiary. Any surplus or deficit arising on the loss of
control is recognised in the income statement.
Investment in associates
An associate is an entity over which the RCS Group has
significant influence and which is neither a subsidiary nor
a joint arrangement. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
An investment in associate is accounted for using the equity
method, except when the investment is classified as held for
sale in accordance with IFRS 5 Non-current assets held-for-
sale and discontinued operations. Under the equity method,
investments in associates are carried in the consolidated
statement of financial position at cost adjusted for post
acquisition changes in the group’s share of net assets of the
associate, less any impairment losses.
Losses in an associate in excess of the RCS Group’s interest in
that associate are recognised only to the extent that the RCS
Group has incurred a legal or constructive obligation to make
payments on behalf of the associate.
Any goodwill on acquisition of an associate is included in
the carrying amount of the investment, however, a gain
on acquisition is recognised immediately in the income
Profits or losses on transactions between the RCS Group and
an associate are eliminated against the investment to the
extent of the RCS Group’s interest therein.
When the RCS Group reduces its level of significant influence
or loses significant influence, the RCS Group proportionately
reclassifies the related items which were previously
accumulated in equity through other comprehensive income
to profit or loss as a reclassification adjustment. In such cases,
if an investment remains, that investment is measured to fair
value, with the fair value adjustment being recognised in
profit or loss as part of the gain or loss on disposal.
Jointly controlled operations
A jointly controlled operation is a joint arrangement carried
on by each operator using its own assets in pursuit of the
joint operations. The consolidated financial statements
include the assets that the RCS Group controls and the
liabilities that it incurs in the course of pursuing the joint
operation, and the expenses that the RCS Group incurs and
its share of the income that it earns from the joint operation.
Jointly controlled ventures
A joint venture is a joint arrangement whereby the joint
venturers that have joint control of the arrangement, have
rights to the net assets of the arrangement. A joint venturer
shall recognise its interest in a joint venture as an investment
and shall account for the investment by applying the equity
1.4 Use of Estimates and Judgements
The preparation of consolidated financial statements
in conformity with IFRS, requires management to make
judgements, estimates and assumptions that may affect
the application of policies and reported amounts of assets
and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience
and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis
of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.