Policies for preparation of the consolidated financial statements
Subsidiaries are companies that the group has control over. Control is created when the group, by participating in an entity, is exposed to the entity’s variable profit or is entitled to partake in its variable profit, and it is able to affect the said profit by exercising its control over the entity.
The acquisition method has been used to eliminate share ownership between group companies. The transferred consideration and the acquired company’s identifiable assets and liabilities have been recognized at fair value at the time of acquisition. Costs related to the acquisition have been recognized as expenses. The consideration transferred does not include transactions that are treated separately from the purchase. These are usually recognized in profit or loss. Any possible contingent purchase price is valued at fair value at the time of acquisition, and it is classified as either liability or equity. A contingent purchase price classified as a liability is valued at fair value at the end of each reporting period, and the resulting profit or loss is recognized in profit or loss. A contingent purchase price classified as equity is not valued again. Any possible non-controlling interests in the object of the acquisition are recognized either at fair value or at an amount corresponding to the non-controlling interests’ proportional share of the object’s identifiable net assets. The recognition principle is defined separately for each business acquisition. The treatment of goodwill resulting from the purchase of subsidiaries is described in the section titled “Goodwill”.
Acquired subsidiaries are included in the consolidated financial statements from the moment the group gains control, and transferred subsidiaries are included up to the moment the control ceases to exist. Any business transactions between group companies, receivables, liabilities and unrealized gains as well as the internal distribution of profits are eliminated when the consolidated financial statements are prepared. Unrealized losses are not eliminated if the loss is due to impairment. Changes in the Parent Company’s ownership interest in the subsidiary that do not lead to loss of control are treated as business transactions concerning equity.
Associated companies are companies that the group has significant influence over. Significant influence is generally established when the group owns more than 20% of the votes in the company or when the group otherwise has significant influence but no control.
Associated companies are consolidated into the consolidated financial statements by means of the equity method. If the group’s share of the losses of an associate exceed the investment’s book value, the investment is recorded at zero value and losses exceeding book value are not consolidated unless the group is committed to fulfilling the obligations of associates. Investments in associates include the goodwill created by the acquisition. Unrealized gains and losses between the group and the associate have been eliminated in proportion to the group’s ownership interest. Unrealized losses are not eliminated if the business transaction points toward the impairment of the transferred asset. The share of profit in an associated company, proportional to the group’s ownership interest, is presented prior to operating profit. Correspondingly, the group’s share of any changes recognized under other items in the associated companies’ comprehensive income is recognized under other items in the group’s comprehensive statement of income. The group’s associated companies have had no such items during the accounting periods 2015–2021.
Avidly group does not have any joint ventures.