ANNUAL INTEGRATED REPORT 2021
ANNUAL INTEGRATED REPORT 2021 | AXTEL
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capable of affecting the returns through its power over the entity.
When the Company's interest in subsidiaries is less than 100%, the
interest attributed to external stockholders is recorded as non-
controlling interest. Subsidiaries are fully consolidated in the date
on which control is transferred to the Company and up to the date
it loses such control.
The accounting method used by the Company for business
combinations is the acquisition method. The Company defines a
business combination as a transaction in which it gains control
of a business, and through which it is able to direct and manage
the relevant activities of the set of assets and liabilities of such
business with the purpose of providing a return in the form of
dividends, smaller costs or other economic benefits directly to
stockholders.
The consideration transferred for the acquisition of a subsidiary is
the fair value of the assets transferred, the liabilities incurred, and
the equity interests issued by the Company. The consideration
transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable
acquired assets and liabilities and contingent liabilities assumed
in a business combination are initially measured at their fair
values at the acquisition date. The Company recognizes any non-
controlling interest in the acquire based on the share of the non-
controlling interest in the net identifiable assets of the acquired
entity.
The Company accounts for business combinations using the
predecessor method in a jointly controlled entity. The predecessor
method involves the incorporation of the carrying amounts of the
acquired entity, which includes the goodwill recognized at the
consolidated level with respect to the acquiree. Any difference
between the transferred consideration and the carrying amount
of the net assets acquired at the level of the subsidiary are
recognized in equity.
The acquisition-related costs are recognized as expenses when
incurred.
Goodwill is initially measured as excess of the sum of the
consideration transferred and the fair value of the non-controlling
interest in the subsidiary acquired over the net identifiable assets
and liabilities assured. If the consideration transferred is less than
the fair value of the net assets of the subsidiary acquired in the
case of a bargain purchase, the difference is recognized directly in
the consolidated statement of income.
If the business combination is achieved in stages, the book value at
the acquisition date of the interest previously held by the Company
in the acquired entity is remeasured at its fair value at the acquisition
date. Any loss or gain resulting from such remeasurement is
recorded in results of the year.
Transactions and intercompany balances, as well as unrealized
gains on transactions between Axtel companies are eliminated
in preparing the consolidated financial statements. In order to
ensure consistency with the policies adopted by the Company, the
amounts reported by subsidiaries have been modified where it was
deemed necessary.
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