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Ascott Residence Trust
Annual Report 2015
3 Significant accounting policies
The accounting policies set out below have been applied consistently by the Group to all periods presented
in these financial statements and have been applied consistently by the entities in the Group.
3.1 Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. 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. Losses applicable to non-controlling interests in a subsidiary are allocated to
non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
The Group’s acquisitions of subsidiaries are primarily accounted for as acquisitions of assets as the
subsidiaries are special purpose vehicles established for the sole purpose of holding assets.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted
for as transactions with owners and therefore no adjustments are made to goodwill and no gain or
loss is recognised in the statement of total return. Adjustments to non-controlling interests arising from
transactions that do not involve the loss of control are based on a proportionate amount of the net
assets of the subsidiary. Upon the loss of control, the Group derecognises the assets and liabilities of
the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary.
Any surplus or deficit arising on the loss of control is recognised in the statement of total return. If the
Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the
date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an
available-for-sale financial asset depending on the level of influence retained.
(ii) Associates
Associates are those entities in which the Group has significant influence, but not control, or joint control,
over their financial and operating policies. Significant influence is presumed to exist when the Group
holds 20% or more of the voting power of another entity. Associates are accounted for using the equity
method and are recognised initially at cost.
The consolidated financial statements include the Group’s share of the income, expenses and equity
movements of associates, after adjustments to align the accounting policies with those of the Group,
from the date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that
interest (including any long-term investments) is reduced to zero, and the recognition of further losses
is discontinued except to the extent that the Group has an obligation or has made payments on behalf
of the associate.
Notes to the Financial Statements
Year ended 31 December 2015
