Page 70 - Paragon Annual Report 2

66 | Group financial statements
Notes to the consolidated financial statements (continued) 2 Significant accounting policies
The consolidated financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU (‘Adopted IFRS’).
Basis of preparation
The going concern basis has been applied in these accounts. The consolidated financial statements are presented in Euro, rounded to the nearest thousand. They are prepared on the historical cost basis except that certain financial instruments are stated at fair value. Assets classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell.
In the process of applying the Group’s accounting policies, management has made judgements as to the policies that have the most significant effect on the amounts recognised in the financial statements. The accounting estimates and assumptions that management considers to be its critical accounting estimations are detailed and explained in Paragraph (r) below. The accounting policies set out below have been applied to all periods presented.
(a) Basis of consolidation
The consolidated financial statements include the financial statements of the company and all its subsidiary undertakings made up to
30 June 2017. Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investments with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The purchase method is used to account for the acquisition of subsidiaries and group reorganisations. Under the purchase method the cost of the acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred in exchange for the subsidiary.
Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured at fair value at the acquisition date. All acquisition costs are expenses immediately.
Non-controlling interests are initially measured at fair value.
Intercompany transactions and balances between group entities are eliminated on consolidation. Where necessary, the accounting policies applied by subsidiaries have been changed to ensure consistency with the accounting policies applied by the Group.
(b) Revenue recognition
Revenue
Revenue is measured at the fair value of consideration received or receivable and comprises amounts receivable for goods and services, net of trade discounts, up-front payments, VAT and other sales-related taxes.
Revenue for goods is recognised in the Consolidated Income Statement when the significant risks and rewards of ownership are transferred to the customer, normally on shipment of the goods.
Revenue for service is recognised as services are delivered or in proportion to the level of services performed. Revenue for the level of services performed is recognised using the stage of completion method when the outcome can be measured reliably. The stage of completion is determined using relevant criteria including service performed as a percentage of total services or as proportion of costs incurred.
Income from advance billings is deferred and released to revenue when conditions for its recognition have been fulfilled.
Rental income from operating leases is recognised on a straight line basis over the term of lease.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Dividend income
Revenue is recognised with the company’s right to receive payment is established.
Paragon Group Limited – 05258175