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4.11 Environmental assets and liabilities
Environmental assets are deemed to be assets used on a lasting basis in the Company's operations
whose main purpose is to minimise environmental impact and protect and improve the
environment, including the reduction or elimination of future pollution.
In view of the business activities carried on by the Company, it does not have any environmental
liability, expenses, assets, provisions or contingencies that might be material with respect to its
equity, financial position or results. Therefore, no specific disclosures relating to environmental
issues are included in these notes to the financial statements.
4.12Business combinations
Business combinations are accounted for by applying the acquisition method, for which the
acquisition date is determined and the cost of the combination is calculated, and the identifiable
assets acquired and the liabilities assumed aremeasured at their acquisition-date fair value.
Goodwill or gains from a bargain purchase arising from a combination are calculated as the
difference between the acquisition-date fair value of the assets acquired and liabilities assumed
and the cost of the business combination at the acquisition date.
The cost of a business combination is the aggregate of:
-
The acquisition-date fair value of the assets acquired, the liabilities assumed and the
equity instruments issued.
-
The fair value of any contingent consideration that depends on future events or on the
fulfilment of certain specified conditions.
The costs incurred to issue equity or debt securities given up in exchange for the items acquired
are not included in the cost of a business combination.
Also, since 1 January 2010 the cost of a business combination does not include the fees paid to
legal advisers and other professionals involved in the combination or, clearly, any costs incurred
internally in this connection. Such amounts are charged directly to profit or loss.
If, exceptionally, a gain from a bargain purchase arises from the business combination, it is
recognised as income in the income statement.
When the fair value of intangible assets cannot be determined by reference to an active market,
Recognition and Measurement Standard no.19 of the Spanish National Chart of Accounts, as
drafted by Royal Decree 1159/2010, limits the recognition thereof up to the amount in which the
value of the net assets acquired is equal to the cost of the business combination.
If the initial accounting for a business combination is incomplete by the end of the reporting period
in which the combination occurs, the acquirer shall report in its financial statements provisional
amounts for the items for which the accounting is incomplete, and the provisional amountsmay be
adjusted in the period required to obtain the necessary information. However, the measurement
period shall not exceed one year from the acquisition date. The effects of the adjustmentsmade in
that period are recognised retrospectively and comparative information for prior periods must be
revised as needed.
Subsequent changes in the fair value of the contingent consideration are recognised in profit or
loss, unless the consideration has been classified as equity, in which case subsequent changes in
its fair value are not recognised.
