93
CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONTINUED
Accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that may have a financial impact on the entity and are believed to be reasonable under the circumstances.
Revisions to
estimates are recognised in the period in which the estimate is revised and in any future period affected.
Judgements made in the application of AASBs that could have a significant effect on the financial report and estimates with a risk of
adjustment in the next year are as follows:
Construction and mining contracting projects:
-
determination of stage of completion;
-
estimation of total contract revenue and contract costs;
-
assessment of the probability of customer approval of variations and acceptance of claims;
-
estimation of project completion date; and
-
assumed levels of project execution productivity.
It is reasonably possible on the basis of existing knowledge that actual outcomes within the next financial year that are different from the
estimates and assumptions in the areas listed above could
require a material adjustment to the carrying value of amounts due from and
due to customers and amounts receivable from and payable to related parties. Refer to Note 8:
Trade and other receivables
, Note 16:
Trade and other payables
and Note 37:
Related party disclosures.
Lease classification;
Asset disposals:
-
Controlled entities and businesses: determination of loss of control and fair value of consideration; and
-
Other assets: determination as to whether the significant risks and rewards of ownership have transferred;
Estimation of the economic life of property, plant and equipment and intangibles;
Asset impairment testing, including assumptions in value in use calculations;
Assessment of the fair value of available-for-sale assets and derivatives; and
Determination of the fair value arising from business combinations.
Basis of consolidation
Subsidiaries
The Company 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.
Results of controlled entities are included in the consolidated statement of profit or loss from the date control is obtained or excluded from
the date the entity is no longer controlled. Intragroup balances and transactions, and any unrealised gains or losses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the
Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the controlled entity.
Any difference between the amount of the adjustment to non-controlling interests and the fair value of the consideration paid or received
is recognised in the equity reserve. When the Group ceases to have control, any retained interest in the entity is remeasured to its fair
value with the change in carrying amount recognised in profit or loss.
93
