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288 MSM MALAYSIA HOLDINGS BERHAD WHO WE ARE STATEMENT & DISCUSSION BY OUR LEADERS HOW WE OPERATE
ANNUAL INTEGRATED REPORT 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of consolidation and investment in subsidiaries (continued)
Acquisition accounting (continued)
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is re-measured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in
accordance with MFRS 9 in profit or loss. Contingent consideration that is classified as equity is not re-measured,
and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets
acquired is recognised as goodwill. If the total of consideration transferred, non-controlling interest recognised and
previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of
a bargain purchase, the difference is recognised directly in profit or loss (Note 3(d)).

Predecessor accounting
Acquisitions of subsidiaries and businesses under common control that meet the conditions of a merger are accounted
for using the predecessor basis of accounting.
Under the predecessor basis of accounting, the results of subsidiaries and businesses under common control are
presented as if the business combination had been effected throughout the current and previous years. The assets
and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control
shareholder at the date of transfer. On consolidation, the cost of the business combination is cancelled with the
values of the shares received. Any resulting credit or debit difference is classified as reorganisation reserve. Any share
premium, capital redemption reserve and any other reserves which are attributable to share capital of the combined
entities, to the extent that they have not been capitalised by a debit difference, are reclassified and presented as
movement in other capital reserves.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated,
unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the
financial statements of subsidiaries to ensure consistency with the policies adopted by the Group.
Non-controlling interests is the equity in a subsidiary not attributable, directly or indirectly, to a parent. On an
acquisition-by-acquisition basis, the Group measures any non-controlling interests in the acquiree at the
non-controlling interests’ proportionate share of the acquiree’s identifiable net assets. At the end of reporting period,
non-controlling interests consists of amount calculated on the date of combinations and its share of changes in the
subsidiary’s equity since the date of combination.
The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of
its net assets as of the date of disposal including the cumulative amount of any exchange differences or other reserves
that relate to the subsidiary and is recognised in profit or loss.
All earnings and losses of the subsidiary are attributed to the parent and the non- controlling interests, even if the
attribution of losses to the non-controlling interests results in a debit balance in the non-controlling interests.
In the Company’s financial statements, investments in subsidiaries are shown at cost less accumulated impairment
losses.
Where an indication of impairment exists, the carrying amount of the investment is assessed and written down
immediately to its recoverable amount (Note 3(f)).