For personal use only Notes to the  Financial  Statements Mineral Resources Limited Annual Report 2014  61 30 June 2014 Notes to the Financial Statements FOREIGN CURRENCY TRANSACTIONS ISSUED CAPITAL DIVIDENDS BUSINESS COMBINATIONS The financial statements are presented in Australian dollars, which is the Consolidated Entity’s functional and  presentation currency. Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the  dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions  and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in  foreign currencies are recognised in profit or loss. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,  net of tax, from the proceeds. Dividends are recognised when declared during the financial year and no longer at the discretion of the Company. The acquisition method of accounting is used to account for business combinations regardless of whether equity  instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity  instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of  any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the  acquiree is measured at either fair value or at the proportionate share of the acquiree’s identifiable net assets. All  acquisition costs are expensed as incurred to profit or loss. On the acquisition of a business, the Consolidated Entity assesses the financial assets acquired and liabilities  assumed for appropriate classification and designation in accordance with the contractual terms, economic  conditions, the Consolidated Entity’s operating or accounting policies and other pertinent conditions in existence  at the acquisition-date. Where the business combination is achieved in stages, the Consolidated Entity remeasures its previously held  equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the  previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.  Subsequent changes in the fair value of contingent consideration classified as an asset or liability is recognised  in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is  accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non- controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any  pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre- existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the  acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but  only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling  interest in the acquiree, if any, the consideration transferred and the acquirer’s previously held equity interest in  the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts  the provisional amounts recognised and also recognises additional assets or liabilities during the measurement  period, based on new information obtained about the facts and circumstances that existed at the acquisition-date.  The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when  the acquirer receives all the information possible to determine fair value.