65 Consolidated  Notes to the  Financial  Statements Note 1 – Summary of significant accounting policies (a) Statement of compliance (b) Basis of preparation (c) Significant accounting judgements, estimates and  assumptions (d) Adoption of new and revised accounting standards –AASB 2009-5  Further Amendments to Australian Accounting  Standards arising from the Annual Improvements Project [AASB 5, 8, 101, 107, 117, 118, 136 and 139] (f) Business combinations (e) Basis of consolidation –AASB 2009-8  Amendments to Australian Accounting Standards  – Group Cash-settled Share-based Payment Transactions [AASB 2] – AASB 2009-10  Amendments to Australian Accounting Standards  – Classification of Rights Issues  [AASB 132] –AASB 2010-3  Amendments to Australian Accounting Standards  arising from the Annual Improvements Project  [AASB 3, 7, 121,  128, 131, 132 and 139] – Interpretation 19  Extinguishing Financial Liabilities with Equity  Instruments  and AASB 2009-13  Amendments to Australian  Accounting Standards arising from Interpretation 19  [AASB 1] AGL Energy Limited (Parent Entity) is a company limited by shares  incorporated in Australia whose shares are publicly traded on the  Australian Securities Exchange (ASX). The financial report includes the consolidated financial statements  which comprise the Parent Entity and its subsidiaries (together  referred to as the consolidated entity). The financial report is a general purpose financial report which has  been prepared in accordance with the  Corporations Act 2001 ,  Accounting Standards and Interpretations, and complies with other  requirements of the law. Accounting Standards include Australian equivalents to International  Financial Reporting Standards (A-IFRS). Compliance with A-IFRS  ensures that the financial statements and notes of the consolidated  entity comply with International Financial Reporting Standards  (IFRS). The financial report was authorised for issue by the Directors on  25 August 2011. The financial statements have been prepared on the basis of  historical cost, except for derivative financial instruments and  available-for-sale financial assets, which are measured at fair value. The Parent Entity is a company of the kind referred to in ASIC Class  Order 98/0100, dated 10 July 1998, and in accordance with that  Class Order, amounts in the financial report are rounded off to the  nearest tenth of a million dollars, unless otherwise indicated. The  financial report is presented in Australian dollars, unless otherwise  noted. The significant accounting policies that have been adopted in  the preparation and presentation of the financial report are set  out below. In the application of the consolidated entity’s accounting policies,  management is required to make judgements, estimates and  assumptions about the carrying amounts of assets and liabilities  that are not readily apparent from other sources. The estimates and  associated assumptions are based on historical experience and  other factors that are considered to be relevant. Actual results may  differ from these estimates. The estimates and underlying assumptions are reviewed on an  ongoing basis. Revisions to accounting estimates are recognised in  the period in which the estimate is revised if the revision affects  only that period, or in the period of the revision and future periods  if the revision affects both current and future periods. Refer to  Note 2 for a discussion of critical judgements in applying the  entity’s accounting policies, and key sources of estimation  uncertainty. The following new and revised Accounting Standards and  Interpretations have been adopted in the current reporting period.  Their adoption has not had any significant impact on the amounts  reported in these financial statements but may affect the  accounting for future transactions and arrangements. Where a business combination is achieved in stages, the  consolidated entity’s previously held interests in the acquired entity  are remeasured to fair value at the acquisition date (i.e. the date the  consolidated entity attains control) and the resulting gain or loss,  if any, is recognised in profit or loss. Where applicable, the consideration for the acquisition includes  any asset or liability resulting from a contingent consideration  arrangement, measured at its acquisition-date fair value.  Subsequent changes in such fair values are adjusted against the cost  of acquisition where they qualify as measurement period  adjustments. All other subsequent changes in the fair value of  contingent consideration classified as an asset or liability are  accounted for in accordance with relevant Standards. Changes in the  fair value of contingent consideration classified as equity are not  recognised. Acquisitions of subsidiaries and businesses are accounted for using  the acquisition method. The consideration for each acquisition  is measured at the aggregate of the fair values (at the date of  exchange) of assets given, liabilities incurred or assumed, and  equity instruments issued by the consolidated entity in exchange  for control of the acquiree. Acquisition-related costs are recognised  in profit or loss as incurred. Changes in the consolidated entity’s interests in subsidiaries that  do not result in a loss of control are accounted for as equity  transactions. All intra-group transactions, balances, income and expenses are  eliminated in full on consolidation. Where necessary, adjustments are made to the financial statements  of subsidiaries to bring their accounting policies into line with those  used by other members of the consolidated entity. The results of subsidiaries acquired or disposed of during the year  are included in the consolidated income statement from the  effective date of acquisition and up to the effective date of  disposal, as appropriate. The consolidated financial statements incorporate the financial  statements of the Parent Entity and its subsidiaries (together  referred to as the consolidated entity). Subsidiaries are entities  controlled by the Parent Entity. Control is achieved where the  Parent Entity has the power to govern the financial and operating  policies of an entity so as to obtain benefits from its activities.