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2.3 Critical accounting estimates
The preparation of fnancial statements in conformity with NZ IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The estimates and judgements are reviewed by management on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised. The following are the critical estimates and
judgements management has made in the process of applying the Group’s accounting policies and that have the most
signifcant impact on the amounts recognised in the fnancial statements.
(a) Fair value of assets and liabilities
The Company and Group record certain assets and liabilities at fair value in the statement of fnancial position as follows:
Investment properties (note 18), farm and other properties (note 17) have been valued by independent valuers as at 31
March 2012 and 31 March 2011 using a mixture of market evidence of transactional prices for similar properties, direct
comparison, capitalisation and discounted cash fow approaches.
Biological assets (note 13) comprise livestock and forests. Both are valued by independent valuers using current market
prices less point of sale costs (livestock) and expectation value method less point of sale costs (forests).
Other fnancial assets at fair value through proft or loss (note 15) include shares in unlisted companies held at fair value.
The fair value of these shares, in the absence of quoted prices, has been determined using valuation techniques.
Interest rate swaps (note 21) are valued using discounted cash fow techniques.
The determination of fair value for each of the assets and liabilities above requires signifcant estimation and judgement
which have a material impact on the statement of comprehensive income and statement of fnancial position.
(b) Impairment testing
Intangible assets with indefnite useful lives being quota (note 16) are required to be tested for impairment at least
annually. This requires an estimation of the recoverable amount of the quota based on the higher of value in use or fair
value less costs to sell. The determination of the recoverable amount of the quota requires signifcant estimation and
judgment.
2.4 Principles of consolidation
(i) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the
fnancial and operating policies, generally accompanying a shareholding of more than one‑half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de‑consolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Acquisition‑related costs are expensed as incurred. Identifable
assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date. On an acquisition‑by‑acquisition basis, the Group recognises any non‑controlling
interest in the acquiree either at fair value or at the non‑controlling interest’s proportionate share of the acquiree’s net
assets.
Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to refect changes in consideration
arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.
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 Group’s share of the
identifable net assets acquired is recorded as goodwill. If this 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 the statement of comprehensive
income.
notes to the financial Statements continued