31 / 120
28
Mega ICBC
-28-
(2)
Basis for preparation
Except for financial assets and financial liabilities (including derivative instruments) at fair value, Defined benefit liabilities recognised based
on the net amount of pension fund assets less present value of defined benefit obligation, and available-for-sale financial assets measured at
fair value, these consolidated financial statements have been prepared under the historical cost convention.
The analysis of expense is classified based on the nature of expenses.
The management has to make certain significant accounting estimates based on their professional judgment and decide the accounting policy
according to the IFRSs as endorsed by the FSC. Any change in the assumption could result in a significant change in the financial statements.
The management of the Bank and its subsidiaries believes that the assumptions used in the consolidated statements are appropriate. For highly
complicated matters, matters requiring high level of judgment, significant judgment that could have an impact on the consolidated financial
statements and estimate of uncertain resource, please refer to Note 5 for further details.
(3)
Basis for preparation of consolidated financial statements
A.
The accompanying consolidated financial statements of the Bank and its subsidiaries are prepared in conformity with the “Regulations
Governing the Preparation of Financial Reports by Public Banks”. The Bank and its subsidiaries prepares the consolidated financial
statements by aggregating the Bank and its subsidiaries’ assets, liabilities, revenues and gains, and expenses and losses accounts, which
have been eliminated versus owners’ equity during the consolidation. In addition, the Bank and its subsidiaries’ financial statements are
prepared in the same reporting period. The accounts on the accompanying consolidated financial statements are not categorized into
current and non-current items. The related accounts are properly categorized according to the nature of each accounts, and sequenced by
their liquidity.
The consolidated financial statements of the Bank and its subsiaries include financial information of all consolidated branches and the
parent company for the years ended December 31, 2015 and 2014.
Subsidiaries are all entities of which the Bank holds directly or indirectly more than 50% of the total voting shares and over which the
Bank has controlling power and the Bank has the power to govern the financial and operating policies where the Bank may gain profit
from the activities of the branches. The existence and effect of potential voting rights that are currently exercisable or convertible have
been considered when assessing whether the Bank controls another entity.
Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Bank and its
subsidiaries are eliminated from the consolidated financial statements.
Transactions and events under similar situation should adopt consistent accounting policies and valuation method in preparing
consolidated financial statements. If the accounting policies of the subsidiaries are different from the accounting policies used in the
consolidated financial statements, adjustments will be made in relation to the financial statements of the subsidiaries to ensure the
consistency between accounting policies of the affiliated entities and those used in the consolidated financial statements.
B.
The consolidated financial statements include the following directly and indirectly owned subsidiaries.
Name of subsidiaries
Relationship
Major business
activities
Percentage of holding shares (%)
December 31, 2015 December 31, 2014
Mega International Commercial
Bank (Canada)
Subsidiary of the
Bank
Commercial Banking
100.00
100.00
Mega International Commercial
Public Co., Ltd. (Thailand)
Subsidiary of the
Bank
Commercial Banking
100.00
100.00
C.
Unconsolidated entities:
Name of subsidiaries
Relationship
Major business activities
Percentage of holding shares (%)
December 31, 2015 December 31, 2014
Cathay Investment &
Development Corporation
(Bahamas)
Investee
International Investment & Exploration
100.00
100.00
Mega Management
Consulting Co., Ltd.
Investee
Venture capital and management
consulting etc
100.00
100.00
Cathay Investment &
Warehousing Co., S.A.
Investee
1.
Storage and warehousing of imported
commodities
2.
Manage and make the investment for the
business in foreign trade business
100.00
100.00
Ramlett Finance Holdings
Inc.
Investee
Real estate investment industry
100.00
100.00
Yung-Shing Industries Co.
Investee
Packaging, printing and agency of
manpower service
99.56
99.56
China Products Trading
Company
Investee
Investments in products businesses,
storage businesses and other businesses
68.27
68.27
As the individual total assets or operating revenue amounts of the above subsidiaries are immaterial, the accounts of these subsidiaries
are not included in the Bank’s consolidated financial statements although the Bank holds more than 50% equity interest in these
subsidiaries. The investments of certain subsidiaries are accounted for under equity method.
D.
Adjustments for subsidiaries with different balance sheet dates: None.
E.
Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.