2 BASIS OF PREPARATION (CONTINUED)
2.4 Use of estimates and judgements
The preparation of the financial statements in conformity with RAP 7 (2012) requires the Manager
to make judgements, estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised and in any future
periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in
applying accounting policies that have the most significant effect on the amounts recognised in the
financial statements are described in the following notes:
• Note 4 – valuation of investment properties
• Note 24 – valuation of financial instruments
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these
financial statements, and have been applied consistently by Group entities.
3.1 Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method in accordance with FRS 103
Business Combinations
as at the acquisition date, which is the date on which control is transferred to
the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, the Group takes into consideration potential voting rights
that are currently exercisable.
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised in the Statement of Total Return.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities,
that the Group incurs in connection with a business combination are expensed as incurred.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control commences until the date that control
ceases. The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group.
Year ended 31 December 2014
NOTES TO THE FINANCIAL STATEMENTS
SABANA REIT
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ANNUAL REPORT 2014
104
