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GB Auto and its subsidiaries (S.A.E.)
Notes to the consolidated financial statements For the financial Year ended December 31, 2014
(In the notes all amounts are shown in Thousand Egyptian Pounds unless otherwise stated)
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of
an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are mea-
sured initially at their fair values at the acquisition date.
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is
recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired,
the difference is recognised directly in the income statement
Inter-Company transactions, balances and unrealised gains on transactions between Group companies are eliminat-
ed. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Account-
ing policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
(b) Transactions of selling, acquisition and minority interests
The Group recognize transactions with minority interests that do not result in change in control as equity transac-
tions. Gains and losses resulted from selling equity to minority interest are recorded in the equity. Purchases from
minority interests recording in equity, being the difference between the consideration paid and carrying value of the
share acquired of net assets of the subsidiary.
If the losses applicable to the minority in a consolidated subsidiary exceed the minority interest in the subsidiary’s
equity, the excess, and any future losses applicable to the minority, are allocated against the majority interest except
to the extent that the minority has a binding obligation and is able to make an additional investment to cover the
losses. If the subsidiary subsequently reports profits, such profits are allocated to the majority interest until the mi-
nority’s share of losses previously absorbed by the majority has been recovered.
(c) Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost.
The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its
share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition move-
ments are adjusted against the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other
unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made pay-
ments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s
interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an im-
pairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure
consistency with the policies adopted by the Group.
C. Foreign currency translation
(1) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial
statements are presented in Egyptian Pounds which is the Group’s functional and presentation currency.
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