Acquisitions are accounted for using the acquisition method. In accordance with IFRS 3R, the identifiable assets and the liabilities assumed on the acquisition date are recognised separately from goodwill, irrespective of the extent of any non-controlling interests. The identifiable assets acquired and the liabilities assumed are measured at their fair value.
The amount recognised as goodwill is calculated as the amount by which the sum of the consideration transferred, the amount of non-controlling interests in the acquiree and the fair value of all previously held equity interest at the acquisition-date exceeds the fair value of the group's interest in the acquiree's net assets. If the consideration transferred is lower than the fair value of the acquiree's net assets, the difference is recognised as a gain.
For each acquisition, the group decides on a case-by-case basis whether the non-controlling interest in the acquiree is recognised at fair value or as the present proportion of the net assets of the acquiree. The option to recognise non-controlling interests at fair value is currently not used. As a result, non-controlling interests are recognised at the proportionate share of the fair value of the net assets attributable to them excluding goodwill.
For business contributions achieved in stages, previously held equity interests are recognised at their fair value on the acquisition-date. The difference between their carrying amount and fair value is recognised in the consolidated income statement.
For the purpose of impairment testing, goodwill is allocated to cash-generating units that are likely to benefit from the business combination.
Transaction costs are immediately recognised in the income statement. Contingent consideration elements are included at fair value at the acquisition-date when determining the consideration transferred. Contingent consideration elements may consist of equity instruments or financial liabilities. Depending on the classification, changes in their fair value are reflected in subsequent measurements.
The consolidated financial statements include all of the parent company's subsidiaries. Intragroup balances, transactions, income and expenses, and gains and losses on intercompany transactions are completely eliminated. Deferred taxes are recognised on temporary tax differences resulting from consolidation entries.
Transactions with non-controlling interests are treated as transactions with the Group's equity investors. Differences between the consideration paid for the acquisition of a non-controlling interest and the relevant proportion of the carrying amount of the subsidiary's net assets are recognised in other comprehensive income. Gains and losses arising from the sale of non-controlling interests are also recognised in other comprehensive income, provided there is no change in control.
Associates and joint ventures that are material to the financial position and financial performance of the KION Group are accounted for using the equity method.
